Study Shows Low Reliability for Routing Payments on the Lightning Network
A new study conducted by Diar, has revealed that routing payments on the Lightning Network is not reliable. Diar is a company that provides analysis on different developments within the global digital currency industry.
The Lightning Network is a second layer payment protocol that has been designed in order to allow the original Bitcoin network to scale. With Lightning Network (LN) implementation, transactions would be processed very fast, and without fees.
The LN protocol has been accepted by the Bitcoin community. At the moment the LN is being tested in order to solve bugs and improve it. It is also important to mention that the protocol strumbles when it processes large amounts of Bitcoin.
The number of nodes in the network has been increasing, which is quite promising for it. But the amount of Bitcoin that it is able to handle remains very low. Indeed, there are 2,587 nodes, 7959 channels and 26.717 BTC.
Each of the nodes in the network has four channels open with an average capacity of $20 dollars. Additionally if the operation has no more than just a few dollars, the success of the transaction is 70% while the success rate for a payment of less than $200 dollars is around 1 percent.
The LN has another important issue that critics mark. Both parties participating in a transaction need to be online in order to process it. This is why it is important to create channels with nodes that are always online and with enough liquidity to route larger transactions.
The study explains:
“The lack of liquidity between nodes, and the online factor, has led to the concentration of capacity to only a few large nodes. Ten of the largest LN nodes (0.4% of total nodes) currently have 53% of the network’s capacity while the remaining 2,500 nodes have 47%.”
If the transaction cannot be routed to the recipient, then it fails and the funds are returned to the sender. The LN has been embraced by different companies all over the world, including a Portuguese engineer that created a platform known as ‘Poketoshi.’ This software allows individuals to play Nintendo’s Pokemon games using the Lightning Network.
The engineer has decided to use the LN for users to enter their gaming commands and charge 10 satoshi per command.
Additionally, there have been other companies that have already implemented lightning network, like NeverFiat.