Is The Lightning Network Becoming More Centralized? 10% Of Nodes Hold 80% Bitcoin

The Lightning Network has been touted as the possible solution for the Bitcoin scalability concerns. However, various researches have indicated that there is a small percentage of nodes that handle most of the funds in the network. Is the decentralized finance product becoming more centralized?

The widespread adoption of the Bitcoin has now come with the scalability of the technology the BTC is built on. With reports indicating that the Bitcoin has the ability to process only a specific number of transactions per second proportional to the size of a block and its release frequency.

The Bitcoin Lightning Network (LN) has been touted as the solution to the scalability concerns. It is a “Layer 2” protocol that operates on top of Blockchain-based cryptocurrencies. An attempt to create a payment platform that overlaps over a cryptocurrency such as Bitcoin affording users cheaper and faster transactions.

A research paper points out that there is unequal distribution of wealth in the Lightning Network with some nodes holding most of the funds. Notably 10% of the nodes are controlling 80% of the funds in the Network. This exposes the vulnerability as they cannot afford to lose the nodes as they are too essential to operations.

“As only about 10% (50%) of the nodes hold 80% (99%) of the bitcoins at stake in the BLN… Removing hubs leads to the collapse of the network into many components… suggesting that this network may be a target for the so-called split attacks.”

This could be solved by lowering the barriers which may incentivize individuals such as hobbyists to take up running routing nodes. Meaning they could setup infrastructure at reduced costs as Christian Decker lightning engineer at bitcoin tech startup Blockstream explained.

After detailed analysis by researchers on the evolution of the global nodes that carry out transactions in different geographical locations they were able to determine the various nodes transactions pass through.

The end nodes are mostly passive as they just await to send and receive. However, it was the center (routing) nodes that picked up the slack by directing transactions throughout the network. This has resulted to some of them overcharging a little for their services.

In a report by Hebrew University researchers demonstrated how to exploit vulnerabilities and carry out a congestion attack that would render some routes locked for up to days. The results were damning as they proved they could effectively lock up most of lightning’s liquidity causing instability to the network.

Mr. Decker was not worried as he explained that criticizing their model could only lead to progress.

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Author: Lujan Odera

Lightning Labs Raises $10M And Launches ‘Loop’ Beta For Faster LN to BTC Payments

Lightning Labs has managed to raise $10 million in a Series A funding that is meant to help the company launch the first merchants’ service for Bitcoin (BTC) payments.

The round was led by Craft Ventures. Managing Director Brian Murray joined the board of directors at Lightning Labs, while other investors were David Heller, the former head of securities at Goldman Sachs, Slow Ventures, Ribbit Capital and Avichal Garg of Electric Capital. This is what Murray said about the service Lightning Network is providing for BTC:

“If Bitcoin is going to reach its potential of being a global currency then it’s going to need to go much faster and cheaper than the base layer. Visa is the payment network that facilitates a lot of the ways currency moves around the world, this is like the service the Lightning Network provides for Bitcoin.”

Lightning Labs LND Raised $2.5 Million in a Seed Round

Back in 2018, Lightning Labs launched the beta version of LND, its scaling solution. It has raised $2.5 million in a seed round. In June 2019, it launched a mobile wallet app.

Starting today, it’s offering the Lightning Loop paid service. Loop is meant to help with the management of merchants’ payment channels, as Lightning channels need to have BTC in them if they are to remain open. Only a balanced in-and-out flow allows them to remain open, so those who are using them have a serious problem. Lightning Labs’ CEO, Elizabeth Stark, had this to say about Loop:

“Loop ‘in’ helps people put funds into their existing channels… kind of like a prepaid debit card for a lightning account. Loop ‘out’ is currently the most popular product because it allows people to continue receiving funds on lightning.”

Loop Hels with Maintaining Liquidity in the Channels

The Loop service will charge only a small percentage from each loop, helping exchanges and merchants keep liquidity in the channels. Stark thinks Lightning Labs is different from other startups offering the same services because it’s turning into an “infrastructure provider”.

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Author: Oana Ularu

Zap Lightning Network Wallet Founder Launches Strike, The ‘Best Shot’ of Achieving Mass Adoption

The Lightning Network wallet Zap founder Jack Mallers has announced a new application called Strike that will allow you to make Lightning payments with your debit card or bank account. This means, there will be no wallet, no channels, nodes, swaps or liquidity management anymore.

Built on Olympus, it is “designed to usher in an era of Bitcoin that we believe has the best shot of achieving our mainstream hopes and desires.”

Mallers explains in his Medium post that volatility is the prime issue they had because while it is an opportunity in the market, in a consumer-merchant setting it is a non-starter, making it “extremely” difficult for them to accept bitcoin.

Another big issue is taxes. In the US, bitcoin is taxed as property and spending it a taxable event which even extends to the Lightning Network.

“As a merchant, this was arguably a bigger issue. (…) The tax headache was not worth it, and nearly all merchants opted out of accepting bitcoin.”

Creating a wallet, custody and owning Bitcoin was another as people didn’t want to. With Strike, Mallers says,

“We aren’t just changing how Bitcoin looks, but also how it feels. We’re changing a consumer’s relationship with Bitcoin and Lightning, how it is used, and how it is viewed. We’re opening up new ambitions, new ideas, new possibilities, and a new, mainstream audience.”

This product can be used to buy Bitcoin and sell it and by simply scanning the QR code and clicking pay, used for remittance payments and for internet tipping as well.

But it isn’t a custodial wallet so if you are hacked and your BTC stolen, then no one can do anything about it and you have completely lost them.

The second layer on the Bitcoin network, Lightning Network offers real-time cheap settlements, where Strike aims to make the barrier of entry low but high flexibility and ease of use.

Strike is expected to be live on App Stores in the coming months meanwhile to join the beat list of the project, you can go to strike.zaphq.io.

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Author: AnTy

Will Blockstream’s Watchtowers Help Keep The Lightning Network Safe From Attacks?

The Lightning Network (LN) may be controlled and ordered by Watchtowers in the future. Watchtowers are guided by Blockstream’s c-Lightning team and would be a very important improvement on the Lightning Network, the second-layer scaling solution proposed to solve Bitcoin’s scalability issues.

Lightning Network Controlled By Watchtowers

At the moment, the Lightning network works with fraud proofs in order to avoid channels that steal funds. Watchtowers will solve this issue in a new enforcement proposal for the LN called Eltoo. Offline users can protect their funds by deferring to Watchtowers.

This is not the first time that this solution is proposed or tested. Indeed, Lightning Labs and other developers have been working with it. However, this is the first time that such a solution would be implemented on c-Lightning.

In order to protect users, Watchtowers register information from users and store it locally. At the same time, they would be very useful for those nodes that go frequently offline. Nodes that are run by cellphones and similar devices are generally less stable than others.

The c-Lightning developer Christian Decker explained that these Watchtowers are going to play a very important role when users run an unreliable network.

During the last years, the Lightning Network has been growing as a solution for the scalability issues that are affecting Bitcoin and other cryptocurrencies. However, it still needs some time to be developed and tested before it is able to reach the market.

In order for the new Watchtower solution to be approved, it is necessary for the Taproot Bitcoin Improvement Proposal (BIP) to be accepted by the whole Bitcoin community. It is worth pointing out that some months can pass before the market sees this implementation on the Lightning Network.

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Author: Carl T

As Bitcoin for Payments Concept Grows, So is the Lightning Network Fee Debate

As the Bitcoin Lightning Network evolves and becomes something bigger than it was before, several developers are discussing its future at the Lightning Conference, which is happening in Berlin right now.

Now, the developers are discussing the fees of the network. At the moment, the default fees are at 1 satoshi plus 1 part per million of the payment. This means that you pay the smallest unit of Bitcoin plus a small part of the money that was sent.

Node operators have the freedom to hike fees if they wish, but historically, this was not done extensively. According to Rusty Russel, a developer from Blockstream’s c-Lightning, two-thirds of all nodes do not charge more money than the minimum fees. Because of this, he has recently proposed to spike the fees to 5 satoshi plus 500 parts per million, a considerable hike.

Some people believe that increasing the fees is important to protect the future of the network. Pierre-Marie Padiou, the CEO of ACINQ, has agreed with Russel. Jack Mallers, the founder of Zap Solutions did as well. There is a clear movement of people who think that this can solve problems.

However, others are concerned that this might hurt the image of the network, as one of the main selling points of the Lightning Network is that it is very cheap to use it. The CTO of Lightning Labs, Olaoluwa Osuntokun was one of the main forces against the changes. According to him, this could create an image that the developers are the ones deciding the fees on the network.

Olaoluwa believes that the operators should decide. If their fees are too high, people will choose other services. This means that the market would be balanced, in his opinion.

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Author: Gabriel Machado

BTC Users Running Lightning Network Nodes Urged To Update After Confirmed CVE Vulnerabilities Exploited

An unfortunate event happened in the Bitcoin Lightning Network recently. According to the recent announcement made on Twitter by Lightning Labs, the network is currently being exploited due to a vulnerability.

According to the tweet, all Ind 0.7, c-lightning 0.7, eclair 0.3 and their editions below that are possible to be affected by the exploit, so people should upgrade to the latest version of the system in order to protect themselves from the attack. The latest versions, 0.7.1 and 0.3.1, are not subject to the attacks.

Olaoluwa Osuntokun, the Chief Technology Officer (CTO) at Lightning Labs, affirmed that there are several cases of people exploiting the network. The exploit was originally discovered a few days ago by Rusty Russel, another LN coder.

According to Russel, security vulnerabilities could make several projects to lose funds. He did not disclaim exactly what was the bug, obviously, in order to protect the users, but someone or a group of people may have discovered the exploit and is using it to steal money from the LN.

The Twitter profile also warned people that LN technology is prone to have bugs as it is still during its experimental phases. Because of this, nobody should put more money on the network than they were willing to lose if a bug happens.

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Author: Hank Klinger

Lightning Network Software Coder Warns Users About Vulnerabilities Found on BTC’s LN

Rusty Russell, an Australian programmer that is focused on the Bitcoin Lightning Network, has recently affirmed that the community should know that some issues have been found in the code of the LN.

According to him, several Lightning projects could be the victim of major problems if they did not update their code. He affirmed that he found several issues in versions prior to the 0.7.1 one. The issue was started in version 0.3 and continued until it was patched out in the 0.7.1 version.

The 0.7.2 version of the LN has just been launched by Blockstream recently, but this does not mean that everybody has already updated, so problems could appear.

Despite the warning that the code could have been compromised and that bugs would possibly be found within the network, Russell did not explain specifically which problems could happen and what exactly was the exploit that he found.

He only affirmed that all the details about the issue would come in 4 weeks and that everybody should upgrade before then. It was a smart actually a quite common decision. Revealing the details could expose the network to hackers and bad actors, so it is best to wait until everybody has upgraded their systems before revealing the possible issues to the world.

The LN, in case you are not aware of this, is a second layer solution that was created last year to turn the Bitcoin network into a much more effective payment method. The idea was to offer payments that could be cheap and fast.

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Author: Lillian Peter

Blockstream’s Samsom Mow: Bitcoin May Be Bad For Payments, But Lightning Network Can Fix It

Samson Mow, the CSO of Blockstream, has recently affirmed that the Lightning Network solves one of the major problems of the Bitcoin network on a recent interview.

According to him, the whole idea behind BTC is not really to be a currency to be used in everyday activities. The way he sees BTC, it is all about a great way to store value digitally. It is, therefore, a medium for the transfer of wealth, not really a currency. He believes that affirming this has made several people dislike him and affirm that he hates Bitcoin, but that’s far from the truth.

His view is only that BTC was created for that purpose, not to be money. Fortunately, he affirmed, the Lightning Network was created in order to give BTC a shot at becoming the kind of currency that can be used any day.

The LN is pretty fast and the fees are very low. It was created exactly with these payments in mind. One the network reaches mainstream adoption, it can change Bitcoin. No longer people would need to wait hours before transactions are complete.

He also affirmed that something that was interesting about Bitcoin was that the token had some kind of “virgin birth”. Unlike the altcoins that came later and copied its concepts, it was really decentralized and unable to be controlled by a single group. All the times that people tried, hard forks happened.

In related news, Mow has recently affirmed that Facebook’s Libra would be screwed if people decided to make the right choice and use BTC instead.

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Author: Bitcoin Exchange Guide News Team

Bitcoin Lightning Network Surpasses $11 Million Capacity as More LN Updates Progressing Along

Bitcoin-Lightning-Network-Finally-Reaches-11-Million-Capacity

The Bitcoin Lightning Network has just reached a new important milestone. Now the network has the capacity to support $11 million USD in trades. There are even more updates on the way, so 2019 is shaping up to be a great year for the users of the LN.

In case you are not familiar with this solution, you should that the BTC Lightning Network was originally created as an off-chain scaling solution for Bitcoin. All transactions are made outside of the main chain, so they are faster. Originally, the software was launched with some bugs, but most of them have been corrected so far.

New Updates Are Coming: Eltoo, Atomic Multipath Payments (AMP) and Payment Points

Not only the LN is doing great now, but three new updates were also announced on Reddit recently by one of the developers. The first one of them is Eltoo, which is supposed to be an answer to the “toxic waste” problem that plagues the protocol.

This problem stems from the fact that the old state of transactions can be used in order to publish a stale unilateral close transaction or, in simpler words, you can use it try to steal funds, which is what makes a part of the protocol “toxic”.

According to the new update, the old state will be gainsaid by the later state and the problem will end up being fixed this way. This can also be a positive update as it will help more people to participate in the protocol.

However, one problem is predicted to arise with the use of Eltoo. The new protocol would end up requiring a new base layer. This could complicate the route finding algorithm and create even more unexpected issues.

The next update, Atomic Multipath Payments (AMP), will be able to split large transactions into smaller ones in order to make them easier to complete. It was originally proposed by Lightning Labs, one of the main developers for the Lightning Network  (LN), and it lets each payment follows its own path.

There are two variants of this technology so far. One of them is the base version, which uses the same payment hash for all routes and the “high” version, which combines features from the two variants.

According to the developer from Reddit, this update could be important in order to bring more reliability to the whole payment process, but the fees may get higher if it is implemented, which is not really something very good.

Finally, there are also the Payment Points. This update would make the LN stop using pre images and hashes in order to use scalars and payment points instead. All invoices would reveal a private key to the funds.

The main advantage of this model is that it can be used as a noncustodial escrow, which would be a new functionality to the network.

At the time, there are over 13 updates planned for the LN, so these are only some of them. It seems that the Lightning Network will continue to grow and get better for a long time.

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Author: Gabriel Machado