The Lightning Network aspires to enable fast, digitally native payment infrastructure for Bitcoin without sacrificing its core tenets of security, privacy and availability.
- The Lightning Network is often cited as a potential solution for the Bitcoin scaling problem – this report provides a summary of Lightning, outlines the metrics that can give insight and dives into potential vulnerabilities which might hinder broader adoption.
- The Lightning Network is an overlay network powered by Bitcoin smart contracts that enables instantaneous bitcoin payments.
- The Lightning Network has grown since inception in 2018, which can be observed through a growing node count, network capacity and other metrics.
- Lightning can be characterized as a hobbyist network in its current form and – although it works well now – there are a handful of attack vectors developers are working on mitigating.
- The report culminates in providing the thoughts of multiple Lightning developers on what needs to happen to best push Lightning adoption in the future.
Bitcoin was introduced as a “purely peer-to-peer version of electronic cash” that “would allow online payments to be sent directly from one party to another without going through a financial institution.” In the early days, it was exactly that; for a small group of people. Recently, Bitcoin critics and supporters alike have argued that Bitcoin has outgrown that label and the “electronic cash” dream for Bitcoin is dead.
Critics often point to El Salvador and its recent codification of bitcoin as legal tender and claim that Bitcoin is too slow and expensive to be used for casual commerce. In a way, this is absolutely correct. Regular way, layer 1 transactions on Bitcoin are slow and expensive, especially when taking into consideration how many transactions any run-of-the-mill third-party payment processor can handle. Bitcoin’s seven transactions per second and wildly swinging transaction fees makes it an unattractive form of digital cash.
Now, there are clear reasons this is a bad comparison, but for the sake of the casual observer it does the trick. As more users join the Bitcoin ecosystem, the more expensive using Bitcoin becomes. As such, Bitcoin has a scalability problem if it is to become more widely used for commerce. To combat this issue, supporters often bring up the Lightning Network as a solution.
Lightning: A work in progress
That said, much literature and media content has been wildly polarizing when it comes to discussion around the Lightning Network. It is either characterized as a perfect product ready to fix all of Bitcoin’s scaling problems or as a terrible idea that would best be set aside for some other coin to act as peer-to-peer cash. Reality lies somewhere between, and our report covers a range of topics from Lightning metrics that can be analyzed to vulnerabilities that developers are working on.
In researching this report, we asked developers what they were most concerned about and what they thought needed to happen to best push Lightning adoption in the future. They all had unique, nuanced answers that are outlined in the report.
Developers also tend to take the tack of “awesome – but what’s broken?” toward Lightning. They do this, not because they want Lightning to fail, but because they want it to succeed. Individuals, users and stakeholders would be well served doing the same. Casting a critical eye on breakthrough technologies is important for the long-term success of those projects.
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