Is The Bitcoin Lightning Network Dead In The Water?

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Have you heard the news? The Lightning Network has a fatal flaw, one that could lose you a lot of money.

People have been encouraged to stop using a Lightning wallet called Eclair, along with the core libraries of the network – Lightning Network daemon (LND) and C-lightning (a library).

Everyone should upgrade their Lightning Network-enabled products right away, is the gist of the short message from developer Rusty Russell:


Notably, no other messages have been sent to the Lightning development mailing list since Russell’s warning.

If Lightning Never Makes It To Mass Adoption, Does It Make A Difference?

For starters, we have to wonder how many people are actually affected by this.

A minority tribe in the crypto landscape – albeit incredibly vocal – have as an agenda the “Highlander” approach to cryptocurrency: there can be only one.

The overwhelming majority of Bitcoin services have yet to integrate Lightning Network in any form. As a result, spending Bitcoin is more expensive than spending any other cryptocurrency, regardless if you denominate in BTC or in fiat currency.

The Lightning Network is meant to solve the problem of high fees without adding stress to full nodes, but if we consider crypto as a whole to be experimental, then we have to consider projects like Lightning Network, which was repeatedly delayed before now having serious security flaws, as extra experimental.

The user experience isn’t much better or worse than Bitcoin’s native experience. It also requires trust in the people operating “channels.”

For good reason, many in the Bitcoin world have called foul as regards to the scaling solution. Folks like Roger Ver believe that various developers stunted the natural scaling (block size increase) of Bitcoin in order to install their own solutions.

Ver’s detractors charge that he is “scamming” by naming his Bitcoin fork Bitcoin Cash.

Is The Lightning Vision Ideal for Bitcoin?

Lightning creates a new “fee market” – channel operators gather fees and ultimately submit them to the Bitcoin network in large batches. In terms of settlement, there’s no evidence that your transaction exists – on the Bitcoin blockchain at least – until your transactions are submitted for settlement by the channel operators.

Channel operators can reject transactions and do a lot of other things as regards them – these powers were traditionally reserved to miners. One might argue that the system was flawed as well.

The question here is not whether Lightning Network should exist, but whether it has to exist to the detriment of the Bitcoin network as a whole. Is there a valid reason you can’t develop it alongside increasing the size of each block? In theory, the immediate effect would be even cheaper LN transactions, as well as cheaper on-chain transactions.

Since the news broke, the market’s had a pretty wild run. Bitcoin jumped back over $10,000 on Tuesday morning, but analysts believe that Chinese FOREX is fueling that.

There is good reason to believe that Bitcoin markets are far from rational and highly manipulated.

Many envision a future where crypto is used every day. Some insist that the future will be Bitcoin-centric. The Lightning Network’s many setbacks – including this one – offer an opportunity to remember that we’re dealing with highly experimental software, subject to bugs and other forms of destruction.