Brand New Study Shows BTC’s Lightning Network (LN) is Suffering From Trust Issues


Over the course of the past few years, many crypto experts had been saying that the Lightning Network [LN] was the scaling solution that the Bitcoin ecosystem had been desperately waiting for.

However, as soon this “second-layer payment protocol” started to garner more and more attention globally, a number of security flaws in relation to the Lightning Network quickly came to the forefront. For example, in a recent in-depth analysis piece authored by Bitcoin Unlimited’s chief scientist ‘Peter Rizun’, he pointed out a couple of key shortcomings associated with the LN that are quite thought-provoking.

A Closer Look At The Matter

A quick look at Rizun’s study shows us that he likes to visualize the Lightning Network as a set of beads that can connect two or more individuals via a specific monetary pathway.

Analysis Shows Lightning Network Suffers From Trust Issues Exacerbated by Rising Fees

As can be seen from the diagram above, the

“beads can move from side to side but cannot leave the string they’re on”.

As a result of this, the Lightning Network is bound to be faced with liquidity problems either immediately or somewhere down the line — depending upon when the widespread adoption of this promising technology takes place.

Additionally, as part of his findings, Rizun has also exposed some of the flaws that currently exist within LN’s security model— especially those issues that are associated with Hash and Time-Lock Contracts (HTLCs).

Analysis Shows Lightning Network Suffers From Trust Issues Exacerbated by Rising Fees

In regards to the matter, he added:

“The hash and time-lock contracts (HTLCs) used in Lightning payments involve two types of locks: the first is a lock that opens if presented with the correct password (we’ll call this a “hash-lock”), and the second is a lock that opens automatically after a time delay (we’ll call this a “time-lock”),”

“First, Alice asks Carol to think up a secret password and tell her the password’s hash. Let’s pretend the password Carol thought up was ‘boondoggle’ and its hash was ‘45f8’ — Next, Alice places a hash-lock between her and Bob, set to open when presented with a password that hashes to ‘45f8. At this point in time, neither Alice nor Bob can open the lock because neither knows the password — Alice then pushes a bead against the hash-lock. Lastly, she places a time-lock on the left side of the bead, set to automatically open after 48 hours.”


Analysis Shows Lightning Network Suffers From Trust Issues Exacerbated by Rising Fees

Other Key Takeaways From The Study

  • Incase a payment is too small, the aforementioned hash- and time-locks cannot be used to protect the transaction.
  • If the existing state channel is pushed to the blockchain, the value contained within this bucket automatically gets claimed by the miner who confirmed the channel-state transaction.
  • At press time, Bitcoin’s dust threshold is touted to be less than 600 satoshis. What this means is that if native processing charges were to increase by a considerable amount in the near future, using the Lightning Network would once again become quite unfeasible for the masses.
  • The above-stated issue adds a lot more friction to LN’s existing framework since it forces layer-1 transactions to be pushed to layer-2 solutions unnecessarily.

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