Andreas Antonopoulos denied and confirmed myths about Lightning Network

Improve Lightning Network Bitcoin or contributes to its centralization? Andreas Antonopoulos (Andreas Antonopoulos) answered this and other questions in his latest video and identified the six most common myths about Lightning Network, simultaneously confirming some of them.


«Lightning Network centralizes Bitcoin, concentrating all power in the hands of a few large players.»

According to Antonopoulos, this statement suggests that Bitcoin is not centralized in one degree or another. Without technology the second level there are two ways of solving the problems of network bandwidth and increased requirements to its work.

  • Increase basic block size and the allocation of costs for scaling operators of nodes that will lead to some centralization of nodes and hashing.

  • Elimination of transactions outside the network, where the lower level of security and trust. This is already happening, and leads to the fact that a transaction is stored in closed databases of major exchanges.

  • Thus, there was no question of completely decentralised or completely centralised system. It is a choice between off-net private transactions and offline transactions at the second level with a system that does not require trust.

    Approx. ed: At this point in the reasoning of Antonopoulos there is a logical error. They can be summarized as follows: if the network is not completely decentralized, something a little more centralization does not hurt. In fact, he confirms that the mass introduction of Lightning Network will lead to the centralization of transaction processing (processing) in the network of Bitcoin is in the hands of big players, but believes it is a lesser evil than already present centralization of mining or concentration of processing in large platforms (which the introduction of Lightning will not reduce, but rather increases). In addition, there is a third way of solving the problem: Protocol optimizations to reduce the size of onchain transactions, and stored data. The Bitcoin Core team is working in this direction — for example, the aggregation of signatures will reduce the size of the complex and recurring transactions.

    Channels and routing

    «Lightning Network requires that each step of complicated transactions opened and closed new channel».

    Many believe that each transaction occurring in the network, Lightning Network, if it occurs along the chain of nodes, should open a new channel. The cost of financing and settlement of each transaction in this case will be greater than in the blockchain. The transaction is actually only needed a path, and the Lightning Network clients can use the automatic routing processing of the transaction.

    Some also believe that the channel must be closed to calculate each transaction, but this is also incorrect. Open channel can be done many transactions, so the funds can remain in the network and does not require the closure of the channel. Most of these processes will be committed to purses, and not manually.

    Approx. edit: If this myth really exists, Andreas explained everything correctly. Routing to Lightning Network in the presence of permanently open channels is carried out without any extra costs. But to keep a lot of open channels is beneficial only to large payment processors, which leads to the above described centralization of processing.

    The routes and nodes

    «Lightning Network will use the method of «hot potato» route determination».

    In this model, each node reports the transaction as a «hot potato» (approx. ed: the principle by analogy with the children’s game «Hot potato» when the players throw each other the ball not drop) the next node to bring the package to the destination. In this case, each broker knows the source and destination of the package. However, Lightning Network uses a completely different model called the routing source.

    The source node obtains information about all available nodes for routing, such as bandwidth and fees. It then creates the optimum path based on minimum total cost of the route. Further, this route is encrypted at every step along the multilayer principle. Each intermediary knows only the node from which came the transaction. It then deletes the layer available to it and finds the next node that needs to be sent package.

    The ultimate destination node is the only node that receives information that the packet transfer is not necessary. The source node is the only node that knows that the package has not arrived from another node.

    Approx. ed.: the Concept of a multi-stage transaction yet exists mainly in theory, since the current network is complicated enough for multiple transitions.

    The lock bitcoins in the network

    «If each channel needs funding to stay open, it will block a lot of bitcoins in the system.»

    Each channel needs to be sufficient funding to handle the required volume of transactions. But the channels can be recharged only for the implementation of large payments, sending bitcoins to the address of the network Lightning and then taking them out.

    In fact, it is a way to prevent centralization. A node connecting many channels with a large number of bitcoins will become a target for hackers. Better to have more channels to a larger number of nodes in the network with the grid structure than high-cost centralized nodes.

    Approx. ed: Not the best explanation. While the channel exists, it remains blocked, the amount of bitcoins required for financial reporting to close at the moment. This amount (with the effective configuration of the nodes of the sides of the channel) may change dynamically, and it will be the smallest if the exchange occurs in both directions, but still a certain amount in the channel is always necessary. With a large number of channels, and the blocked amount will be significant. Moreover, if the channel is transaction flow solely in one direction, the blocked amount will be equal to the sum of all transferred transactions. And the presence of one large handler of a plurality of nodes does not reduce the concentration of transactions «in the hands», only creating the appearance of its absence.

    The fight against money laundering

    «The operators of the nodes to face risk related to the regulation on combating money laundering».

    Do not have. In most cases the Lightning network is designed to transfer small amounts. As a rule, the regulation for combating money laundering applies only to cash flows a much larger volume. It would be difficult to find and prosecute the individuals working on their home computers. However, if the problem is still there, this causes that the network will begin to better conceal their operations.

    Approx. edit: Also a bad explanation, proving that the original «myth». For regulators, an important amount of transactions of a specific person, not the sum of each individual transaction. In General the problem lies in administrative, not technical.

    Lack of support for Lightning wallets

    «The purses with the support of Lightning messes with the channels and the need to open and close».

    It’s true that early implementations of Network Lightning took out technical data to the surface and revealed the elements that had to be hidden behind a user interface.

    Wallets that support Lightning should look the same as the multi-currency wallets. Sending and receiving will be done by using a QR code and wallet will be able to determine whether the address for the Bitcoin blockchain or Lightning Network.

    Approx. ed: it is too early to speak about full support for LIghtning wallets in the graphical user interface — full featured work with LN for unskilled user is still a thing of the future.

    How to join the Lightning Network?

    If you are interested in running the host Lightning Network, you can see the manual we recently published. You can also look for information about LND (lighting network daemon), clightning, or eclair on GitHub or MainNet.

    Technology gradually improved, so information about her is quickly becoming obsolete. To avoid misinformation and «mythmaking», you need to constantly follow the developments and new versions of the wallets.

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