Topic: Is the Lightning Network centralized? - page 9. (Read 1977 times)

Well, but you can't compare only LN to VISA. The competition is between "the Bitcoin ecosystem" (on-chain + off-chain + maybe sidechains) and "the VISA network".

And take into account the fees credit card companies charge ... they're often higher than Bitcoin transaction fees (and LN fees).

And LN is, as I said, at an early testing stage. So it's logical that most channels are charged with low amounts. I think in a mature LN it won't be a problem to send 200$, while it maybe could be a problem to send $10000.


Well, I interpreted your cite referring to "being online at the moment of the trade":


But first, you don't need 100% constant internet access - it's OK if you are online so often that the Hash-Timelock contracts do not expire. I currently don't know what the standard value for a HTLC length is in current LN implementations, but it would be strange it it was very short.
Second, yes, this is definitively a disadvantage of LN, as I have mentioned earlier - and a reason why I think that LN won't be used for payments "where your life depends on" (e.g. salary payment, trades for expensive goods like houses or cars) but a "prepaid card replacement", which you'll re-charge each month (via LN itself/channel factories).It is also the main reason why I think there will be a market for sidechains. (And I think, too, that there will be several cryptocurrencies, so even if crypto becomes the "leading money" no one will have more than 1 billion users, approximately.)

The already mentioned "watchtowers" should mitigate that problem, too.

I don't think that this will happen. Small LN nodes have no need to generate profits - profits from fees will only be an additional income.

I don't believe there is a statement from FINCEN regarding LN hubs yet, as it's beta technology. Anyway, only "commercial hubs" should be affected (it clearly writes "engages as a business" in the money transmitter definition)- and these will mostly own a license, like Bitcoin exchanges do. I believe that exchanges will be one of the main "LN hub providers" as they will be the easiest way to recharge LN channels. The problem Antonopoulos mentions regarding KYC should be solvable.

And the US isn't the only country in the world to run a LN hub ...

But here is another theory that "rains on your parade", if block rewards become low and fees collected are too low, some of the miners would have to stop, making mining more centralized because the "niche" has become too small to accomodate but the most efficient miners. But we will have to wait and see how that turns out.



Yes, as long as the block size is "regulated" to the most necessary size, the network will scale out. The Bitcoin Cash supporters say it does not matter because "Moore's Law". But what they did not consider is not all node operators are willing to do the hardware upgrades.



Plus everyone should try to understand that Bitcoin is not a "consumer product". It is decentralized, censorship resistant hard money. The core protocol is what should be prioritzed the most. "Scaling for the mainstream" is good, but should only considered "secondary".



6 figures.

Thanks for the article, Zing-Zang, but I want to remark some things here:

And what is the goal of LN? To provide a micropayment network. So where is the problem?

That is also not a problem - it's the norm in online commerce. How do you buy something from some merchant if you or the merchant have no Internet connection? In brick and mortar stores it's the same issue - if you pay with your smartphone, you need an Internet connection, and the store will also be connected. The same with blockchain payments. While the store could, in theory, connect a bit later after you made your transaction, in this scenario he couldn't confirm ("Thanks for your payment!" etc.) your payment.

LN is at an extremely early stage. I have already mentioned that there are some mechanisms that would incentive a bit of centralization, but as the concept matures it should become increasingly easier to route payments avoiding these hubs.

Well, LN is not anonymous - maybe a little bit more than the blockchain. But blockchains are A LOT more verbose than LN

I once thought that the Lightning Network was centralized simply because the fees would rise to the point where ordinary people won't be able to open/close channels. However, I was enlightened by a few members of this community that Channel Factories and Channel Routing help prevents unnecessary increases in fees when opening/closing multiple channels at the same time, as well as giving users the ability to select other nodes on the network if they believe that a specific node is centralized.

Therefore, I believe that the Lightning Network would not affect the decentralization of Bitcoin whatsoever, due to such features. And even if it were to fail in the future, it wouldn't cause any harm to the main chain, since it's a Layer-two solution that operates on its own. Let's hope for a smooth and stable release of the LN for the masses to enjoy.



Yes. We’ll see how everything would turn out to become for the LN once it becomes fully adopted in the mainstream world. Of course, there's the concern of rising fees on the network according to usage, but I guess that developers would figure out a way to maintain Bitcoin as fast and cheap as possible. With the above features such as Channel Factories and Sidechains, nothing could go wrong IMO.



Interesting observation. I've never thought about this in the first place, but I'm glad that you've helped me clarify my doubts about this. I'm so excited to use the LN right away for quick and cheap transactions once the stable version is released.



That's certainly interesting, mate. Atomic swaps are the way of the future, as it provides convenience to people for an instant exchange of one cryptocurrency to another. While I believe that both decentralized and centralized exchanges will exist in the future, atomic swaps may have greater usage as they eliminate risks of hacks, or theft of coins.

Node of LN working how centralized but starting and endidng operations operate in main blockchain whats doing all LN work decetralized

https://cointelegraph.com/news/study-low-reliability-for-successfully-routing-payments-on-lightning-network


Time 7 hours ago,
https://cointelegraph.com/news/homeland-security-agents-posing-as-darknet-crypto-traders-arrest-criminals

Next Step for homeland posing as a LN hub and collecting data to arrest doomad as an illegal money transmitter.    

Here are some tips for you guys running LN hubs and plan to do it without a money transmitter license:
https://www.quora.com/What-is-the-best-way-to-evade-a-police-helicopter
 

FYI3:
Some say Bitcoin Miners will also be targeted as money transmitters.
But that is simply untrue.
https://www.coindesk.com/fincen-bitcoin-miners-investors-money-transmitters/

Me too ... however, if Bitcoin is very popular (>100 million users) and there is no block size increase at all, on-chain transactions will be expensive. For me, sidechains are an interesting "intermediate" layer between on-chain tx and Lightning. They are more trustless than LN but potentially more expensive, as all sidechain validators will also have to store the transaction history, and so they will try to charge a fee, too.

If we need sidechains or LN+on-chain is enough, in my opinion depends on the final user base. If Bitcoin is a "large niche" of a couple of hundreds of millions users, LN+on-chain (with channel factories) may be enough, while in a "world currency" with 1.000+ million users, some third layer (like sidechains) would be needed. For this case, my preferred model would be a network of inter-connected regional sidechains for operations with stores (brick-and-mortar or online) within the same region.

I mentioned channel factories as an example how miners could use their liquidity in BTC to get additional fees. However, they could also operate as "standard" Lightning nodes.

Yes. These swaps could also be the technology that ends making sidechains more usable, as a "sidechain-to-sidechain hop" could be instant (at least if no on-chain settlement is needed).

What are the facts on which they are claiming it to be centralized? Please provide a reference of this claim where you read this.
May be the people who are claiming this are not well aware of lightning network. Lightning network has nothing to do with the centralization in any way.
Up-gradation of network can't change the root characteristic of bitcoin i.e decentralization.

Same. I'm starting to like the Lightning Network because it enables fast and cheap transactions on Bitcoin. Not only that, but it's also decentralized since it allows you to choose your own routing nodes or channels in case there's a centralized or malicious actor on the network. The best of all, as you've said earlier, is that LN is developed by another team, and even if it fails in the future, it won't cause any harm to Bitcoin's main chain.

If the Lightning Network becomes successful for Bitcoin, then I think that the scalability problem would be solved. Then, Bitcoin can continue to grow for years without experiencing downtime in transaction speed, or an increase in fees, due to the flexibility of the Lightning Network. Of course, as with any software implementation, the LN needs to be checked out for bugs over time, to make it stronger and resilient as possible. In the end, time will tell us all whenever LN could fulfill its promise of scaling Bitcoin effectively or not. It would be best to buy Bitcoin at cheap prices and hodl onto them for the long term, just in case its value spikes when the LN becomes mainstream. Just my thoughts

Even if the Lightning Network is centralized .....  it makes the Bitcoin Core more Dezentralized becourse another team made the network.
So far i really love the Lightning power. Was a good update for the Bittcoin.



regards

Then I guess that there will exist on-chain transactions after all. The most important thing here is that miners receive an income in BTC even if the LN is used. And according to your explanation, it seems that miners would still profit from the LN via the use of Channel Factories. As well as you do, I hope that people would also use the LN for small to medium transactions and leave the large transactions to the main chain.

This way, Bitcoin would retain its current level of security, as the amount of hashrate would be the same due to on-chain transactions being processed on the network. What's interesting of the Lightning Network is that it enables atomic swaps which could eliminate the need for an exchange (either centralized or decentralized) to swap from one coin to another. This feature could be useful, IMO, as well as watchtowers to keep the LN as strong as possible.


Well, one thing for sure is that Bitcoin has the most prominent developers in the blockchain industry. Therefore, I think that fees rising over the long-term shouldn't become much of an issue, since solutions would be found to make the LN as better than ever. I'm so excited about this and hope to use the LN in the mainnet soon for everyday purchases at merchants that accept it. 



Yes. Bitcoin Cash is going to become a quite troublesome cryptocurrency, as it grows in user adoption over time. What's worst is that it'll be constantly hard forking to increase its block size over time. Therefore, the bigger the block size, the higher the risk will be for BCH as it turns out to become extremely centralized. I'm glad that Bitcoin still has a 1mb block size limit, despite that it's not scalable this way. It helps to maintain its decentralization, and with second layer solutions such as the LN, the risk of centralizing the main chain is mitigated. 



Yes, we'll see what happens eventually. In the meantime, I guess it's up to buy Bitcoins while they're cheap as I have the feeling that they will skyrocket in value when LN becomes practical in the mainstream world.



You bet I won't. After all, Bitcoin will continue to soar in value once the LN becomes stable and practical in our world. What's best is that over time, Bitcoin becomes scarcer, which shows that it's prone to become more valuable in the future. I'm hoping that it reaches a price goal of $50,000 and beyond. 

Bitcoin made a concious design decision not to increase the block size to make the network "scale out". That means the opportunity to increase the running of full nodes because the requirements for hardware to run them will not be high. That decision maintains decentralization and security.

To solve the problem of scalability in accordance to Bitcoin's design decision, a 2nd layer is needed. Bitcoin Cash is solving it by having everything onchain, but it will have to negatively affect decentralization and security.

Your fear that it might increase the fees astronomically are only that. When that problem arises, do you believe that the developers will leave it alone? There are already future plans to allow channels to add more Bitcoins if needed to refrain the users from opening and closing them as often.


What is worrying in Bitcoin Cash's 32mb blocks is if it scales, it might isolate some full nodes and make it hard for them to sync and keep up to the rest of the network because of the higher hardware requirment.

That's an attack scenario for some bad miners to use to attack the network and isolate some full nodes deliberately. Security and decentralization are slightly given up for scalability.


I believe you are thinking of the worst case scenario. Let us leave that thought open and observe how it happens in practice.


Yes, only time will tell. But never sell your Bitcoins.

I'm not spreading any FUDs. As a long-time Bitcoin user, I hate Bitcoin Cash simply because it will tend out to become extremely centralized in the long term with its huge block size increases. However, I'm only concerned about how the LN on Bitcoin might turn out to become if fees rise to astronomical levels as usage increases over time. I'm still studying the whitepaper related to the Lightning Network, so I still have a lot to learn about it.

Perhaps, LN is still a decentralized scalable solution for Bitcoin after all, considering that you don't need to trust a specific node to use it. The large number of nodes available on the LN, shows the strong support it has among individuals, eventually leading to geographically distributed nodes to prevent centralization. And yes, it's true that there are a lot more nodes within LN than Bitcoin Cash, which shows that BCH is more centralized than BTC. BCH will become even worse as it increases its block size to unprecedented levels over time, making costs to operate a node much expensive for an average Joe.

Nevertheless, I hope to become enlightened about the Lightning Network as I read all about it in the whitepaper. Until this point, I learned things that I've never knew by simply browsing this thread.



Yes, that's correct. If they never did enforce KYC/AML on miners, then I believe that there should be no reason to do so in the LN, since it's not subject to a single jurisdiction. Hopefully, once LN becomes active and stable enough for daily use, we'll see how everything would turn out in the regulatory sector.



I was referring to centralized in the sense that only wealthy individuals will be able to open/close channels. While this might not happen quickly, it will in the long term, as fees on the main chain will keep rising. I think that a simple solution to make the Lightning Network better, would be to increase the block size of the main chain by small increments every 2 to 4 years to make opening/closing channels on the main chain cheaper than ever.

That's why I've believed that LN would become centralized, but other than that, it could perform just as intended without the need for middleman or centralized control. Only time will tell how everything will work out with the LN. Hopefully, it could remain as decentralized as possible to maintain Bitcoin's security and resiliency against external attacks or manipulation. 

And miners could also open well-connected LN nodes, integrate them into channel factories charging a small fee for "recharging" channels etc. . It is short-sighted if miners oppose LN because they fear a smaller income stream from transaction fees, because if LN is a success, then the growing user base will compensate them for transactions which go off-chain (which already exist, albeit via centralized services like Coinbase). Even Jihan Wu once wrote on Twitter, "miners love LN".

The reason why I think that LN will not replace on-chain tx completely is more related to the security concept of LN, which in my opinion isn't really suited for transactions where your life depends on (e.g. your salary). Instead, I expect people using LN as a "prepaid card", recharging their channels (via LN/channel factories) with e.g. 100-500$ per month and then doing all the small transactions via this method.

The difference is that because LN transactions can be "reversed", there are two things to consider:
- you must always have a backup of all the transactions you interchanged with the other side of the channel (and with all sides of a channel factory)
- you must be online at least so often that nobody can reverse your channel state. This is, however, what "watchtowers" want to address.

It is however possible, that if a large hub wants to defraud most of its users, it could combine their LN attack with some other (double-spending?) attack, which could be dangerous if the hub is also a big mining pool. So for me it's crucial that the community should be wary that hubs do not grow to a size of more than a certain number (e.g. 10K) of users, and if possible, to use routes which avoid them. (It may not be entirely possible to figure out which hubs are operated by the same operator, which could be a problem. Need to think a bit about that. )

It could have something to do with the fact that BCH's 32MB blocks are continually empty because there are hardly any transactions, so franky1 feels compelled to drum up support and recruit some new users by attempting to smear the thing people are actually using.  It's basically an aggressive form of marketing.

Consider that if all you're doing is you're listing the "selling points" of a Bitcoin clone with a single value altered (and some of the features missing), the sales pitch doesn't last very long.  So you naturally resort to attacking the clear market leader, because it's literally the only way you'd have anything left to discuss.

BCH apparently doesn't have enough interesting content worth talking about, which is why he has to resort to dramatic fantasy tales, with evil banking hubs and a malevolent Blockstream pulling the strings like a sinister puppeteer behind the scenes.  At least it sounds more intriguing than BCH, even if it's a total fiction.  

I think lightning network is a technology attached on bitcoin transfer and its not affecting on bitcoin blockchain. Bitcoin still decentralized because the power of bitcoin is on decentralize system

Because we have been there before and I believe we need to accept that we cannot agree on some issues. The Bitcoin developers are taking it to one direction and the Bitcoin Cash developer is taking to another one.

Let us leave it and support the network we believe in.



Leave it. It is done. The Lightning Network is live, https://lnmainnet.gaben.win/

The Bitcoin developers decided to solve a problem by maintaining decentralization, security, and through LN, scalability.

The Bitcoin Cash community have their 32mb blocks, which is more than what they need. What is the problem? Why keep attacking Bitcoin?

Interesting. I've never read the whitepaper related to Channel Factories before, but I'm glad that you've shared this information with me. It seems that the LN could be decentralized after all, if Channel Factories achieve said purpose. The good thing about this feature, is that it minimizes on-chain transactions, which prevents the main chain from getting clogged with lots of transactions made from opening/closing channels in the Lightning Network.

Hopefully, the addition of Channel Factories and the use of Watchtowers, would make LN as robust as possible, to help drive Bitcoin's usage to new heights. As long as people don't replace the LN with the main chain, then everything should be fine. Because, imagine if everyone starts using the LN, and never interacts with the main chain. Then, miners might become affected as they won't be earning money from fees in the long run.



I hope so. Because if people start using more the LN than the main chain for any kind of transaction, then miners would be doomed, IMO. But, it seems very unlikely for that to happen since the LN would make transactions on the main chain for opening/closing channels. Therefore, in the end, miners will always get their block reward and fees as usual.



Well, if LN is as secure as Bitcoin's main chain, then there should be nothing to worry about. After all, opening/closing a channel in the LN, requires an on-chain transaction to be made. As such, the LN would obtain the same level of security as the main chain since it requires the blockchain to settle HTLCs. However, as with any new technology, it needs to be properly tested, for issues to be addressed, making it as resilient as possible against external attacks.