Topic: The Lightning Network FAQ - page 41. (Read 33677 times)

Maybe (if I understand you correctly). Generally I support this kind of analysis, and at least it could serve to find parameters to understand LN evolution and possible challenges (Edited, here I left an incomplete sentence). But to be clear: the title "Lightning Network: a second path towards centralisation of the Bitcoin economy", is at best a grotesque clickbait and/or overinterpretation of results. At worst, it may be simply trolling using a "scientific" language.

Agree. What I would like to see, perhaps, is a real-time (or at least, let's say weekly) update on the centrality measures they established.

Bitcoin Visuals has some measures which may indicate relative centralization, too, or at least connectivity and thus resilience against attacks. For example, the "cut channels" indicator shows channels which cannot be closed safely without disconnecting nodes. The percentage of these channels was rising until May 2021, but since then it is slowly decreasing. This may indicate that people were indeed connecting to few nodes making some routes "irreplaceable", but now alternative routes are opening, and thus connectivity is improving again.

For sure. The current growth trend in LN seems to have been started before El Salvador's adoption, though - it began to accelerate in March/April, maybe first due to the rising on-chain BTC fees, but then continuing after the May crash, possibly taking advantage of the low fees in this period. But El Salvador is surely a big test for the network, if they really manage to onboard people via Strike/Zap. So maybe at the end of the year we will have a first impression about how LN will look like in case of mass adoption.

If you mean me, I was never convinced that LN could be totally interconnected without at least smaller hubs (you can search my post history). The challenge is to reach a structure where the hubs don't get too big (with tens of thousands of channels each, a node may get realistic chances to launch attacks), but currently I see no danger here. But those wanting to bring forward LN have to care for that centralization not to happen, for example, periodically revising tutorials (which may have created some centralization according to the blog post linked above) and always pointing out several alternatives when talking to/writing content directed to beginners.

Is strange that some people find LN bad while at the same time are ok with other totally centralized transfer systems, such as exchanges (binance BEP20?)

LN is far from being perfect, but 1) is a choice, not enforced 2) compared to a centralized payment processor still offer some degree of decentralization and possibility of external audit (channel capacity, nodes availability, etc...)

Shower thought, is some degree of centralization in the Lightning Network, to find efficiency, truly bad for you, franky1? If you ask me it’s not. Or are you merely criticizing the people who believe that Lightning is on the far right side of the decentralization spectrum?

i would describe a independent user node network as someone (if the network has 21k nodes it would have an 6 degree of separate) with just 6 channels(average 5-7 range)
where the average would be:
6x6x6x6x6x6  to have everyone inter connected within 6 hops and within 6 channels per node to all 21k nodes

whereby the network if it was truly private and independent, individuals couldnt 'map' / 'visualise' the network even if they tried

whereby the max fee should be just 6x of the standard millisat token fee for a hop becasue all it would take is max of 6 hops
...

however this is not how the network is functioning
firstly the biggest lie.. the invisibility/privacy. as debunked by the many visualisations/maps of the network
if private there should be no way to map the network, not voluntarily or spying

secondly
it is instead a public hub and spoke model.. as people above are now admitting to but saying thats the natural effect.. even though less than 6 months ago they were arrogantly fighting that its an independent and private 'hop'/'route' network that will never centralise

even more recently certain people involved in LN are admitting that the centralisation is happening more often with some hubs refusing connections unless they meet minimum channel balance/htlc min. where they become the inner circle of even larger hubs and those with low balance are left to the outer layers

so although certain people are flip-floppy and then trying to deny their own post history of arrogance and ignorance and ow trying to spin the centralisation as a needed positive.. it is a slight relief they are starting to acknowledge that the hop model is not working for LN. and they are slowly acknowledging the centralisation.

the real centralising factor is not just nodes with 100+ channels. but those nodes only accepting channels with peers of certain balance htlc minimums to create a hierarchy of inner circle high channel balance and outer circle descending balance

for me a hub is a node that has far far more then the 'degree of separation' channels required. and its acceptable balance to create a channel or its minimum HTLC is far more than the average
so nodes requiring more then say 0.07btc per channel and having say 60+ channels. would be considered a hub

.. but just wait for the custodials to jump in and see the network really show off its inner outer circles with the el-three stuff like factories

Actually, you might be being too nice in your assessment of anyone attempting to make definitive analysis regarding what a system like lightning network would be or would have been based on when it was first launched.. maybe giving it a year to come into place might not have been totally accurate in terms of where it might be going, but surely those first 6 months or longer were likely a hodgepodge of scrambling... I remember even the fact that lightning network was launched in January 2017 in quite a premature kind of way as a kind of reaction to the bullshit ongoing spamming attack on the bitcoin network that had been going on for around a couple of months at that time.. and creating stupid-ass narratives for the various shitcoiner pumpers(bcash, ethereum et al) and bitcoin is broken (grampacoin) naysayers. 





Personally, I am not against any kind of analysis that attempts to put matters into perspective and even to perhaps show historical developments as compared with current happenings, so surely we can likely appreciate that lightning network remains a ways from mature, yet I see no real reason not to be attempting to analyze what is going on without necessarily drawing inaccurate and misleading conclusions from nonrepresentative data.. such as the first year of lightning network.

Surely with the recent onboarding in lightning network - perhaps partly fueled by some of the El Salvador news (including realizing that apps like strike actually have utility) seems to bring more attention into creativity that could cause some functionalities and interfaces in the coming years that currently ONLY a few more insightful folks might imagine to be coming... which the occurrence of actual adoption and usage likely puts the whole damned thing to a kind of test that ends up inspiring creativity and even motivations to make money too.. and if some people might not be motivated by making money, they might end up being motivated by serving a kind of "mover and shaker" role in the whole scheme of lightning network related things.. that may well even inspire some other second layer interfaces/businesses that were beyond the imaginations of folks focusing on the matter from a different angle.

I'm reading it. In my opinion it parts from the unrealistic ideal that LN could be totally interconnected, without any hubs, and what the authors call "centralization" seems to be the natural (and most effective) way for the Lightning Network to operate, i.e. as a hub-and-spoke model with small to medium hubs. What they found out is basically that the network is evolving towards this structure.

They seem to ignore that in LN there are naturally distinct classes of nodes: some who only are users, using LN for payments, or as individual merchants, while others are explicitly trying to support the network as hubs (and get fees for it). Comparing these kinds of nodes with a single Gini coefficient would be basically the equivalent of comparing retail users and businesses with a measure intended only for retail users.

It should also be noted that the analyzed period is 2018-19, which was in the initial stage of LN. This means that in this period it is expectable that the network became more centralized. At the beginning of 2018, LN was an experimental field, so it was mainly used by experienced users trying out the software. When time passed, "retail" ("pure user") nodes were increasingly added, which naturally try to connect with relatively well-connected, central nodes, increasing their centrality even more, but I can imagine this being a temporary phenomenon.

If we look at figure 3 (page 6 of the PDF) then we see also that the trend for the centrality measures they're using (Gini coefficient G_c) is increasing, but the curve is progressively flattening and in some cases lowering. This confirms my suspicion: that the "trend towards centralization" they've claimed to have found is mainly a consequence of the early stage the network was in in 2018-19, and that this trend would not continue in the future - it may even reverse.

In short: I would like to see an analysis of this kind with newer data, but maybe we should wait until LN usage grows a little bit more (LN is currently growing relatively fast) to really draw conclusions, so the proportion between "retail" and "hub" nodes becomes more natural. If the trends towards centralization they claim didn't flat out in this period, then it's time maybe to start worrying, but I don't see any reason for that.

There’s an anonymous person who calls himself “StopandDecrypt” who wrote this blog, refuting the “observation” that the Lightning Network is Centralized. It’s a long one and thorough, https://medium.com/hackernoon/them-lightning-network-nodes-sure-do-look-centralized-to-me-what-gives-ee39c9b12ac0

I asked who he was, some people suspect that he is gmaxwell.

Read everything he wrote.

Since the meaning of "centralization" is vague, IMO topology of LN network isn't centralized (star/extended star topology), but unevenly distributed (partially connected mesh network).

Of course Lightning Network is centralizing things, mainly because you need on-chain transaction to introduce each and every participant to the system. As long as this problem is not solved and as long as transaction joining is not implemented, you cannot receive coins "in pure LN", without creating on-chain transaction.

Running a HUB is a problematic thing, don't expect some non-technical users to do that kind of things. And similarly as with on-chain BTC, where many people hold them on exchanges, in LN many people hold their coins in custodial or half-custodial wallets, so the consequences are you can see big HUB's accumulating a lot of coins and many small nodes being connected with them.

Lightning Network: a second path towards centralisation of the Bitcoin economy

Have you read this paper? What's your opinion?

exchanges dont want to set up channels with every random user. they prefer having some hub manage the users. in a depleting hierarchy where values go down the furthest from center they are. to ensure values can flow in the right direction without any disorder of poor nodes in the middle causing bottlenecks for routes

                                                                                         /<0:0.0016>userf1a
                                                                                        //<0:0.0016>userf1b
                                                   <0.008:0.008>factory1-<0:0.0016>userf1c
                                                  /                                     \\<0:0.0016>userf1d
                                                 /                                       \<0:0.0016>userf1e
                                                /
                                               /                                        /<0:0.0016>userf2a
                                              /                                        //<0:0.0016>userf2b
                                             /     <0.008:0.008>factory2-<0:0.0016>userf2c
                                            /    /                                    \\<0:0.0016>userf2d
                                           /   /                                       \<0:0.0016>userf2e
                                          /  /
                                         / /                                        /<0:0.0016>userf3a
                                        //                                        //<0:0.0016>userf3b
exchange<0.04:0.04>hub<--<0.008:0.008>factory3-<0:0.0016>userf3c
                                       \\                                        \\<0:0.0016>userf3d
                                        \ \                                       \<0:0.0016>userf3e
                                         \ \          
                                          \ \                                        /<0:0.0016>userf4a
                                           \  \                                     //<0:0.0016>userf4b
                                            \   <0.008:0.008>factory4-<0:0.0016>userf4c
                                             \                                     \\<0:0.0016>userf4d
                                              \                                     \<0:0.0016>userf4e
                                               \
                                                \                                        /<0:0.0016>userf5a
                                                 \                                      //<0:0.0016>userf5b
                                                   <0.008:0.008>factory5-<0:0.0016>userf5c
                                                                                       \\<0:0.0016>userf5d
                                                                                        \<0:0.0016>userf5e


this is how the lightning network will eventually lay out like a hierarchy in a network of 5 peer with descending accepted value dependant on where in the network hierarchy certain nodes are

after all if say hub was actually user5f with only 0.0016 to move to exchange.. NONE of the 5 factories can move their 0.08 to the exchange through the hub(user5f)

Sadly no, I'm totally in the clear as it were.  I have a Tro browser, but just good ole Windoze for the Zap Wallet and the Eclair is on my phone and has in the past worked ok, just not now.  Both are on different internet plans with different provider, so I've been figuring that the issue was a connectivity one.

A couple of weeks ago I installed Eclair onto a brand new phone I'd bought with NFC features to try out some RF multi wallets connecting to a node that starts 03e9e5a2ae70e42 ... when I went to do a transaction a couple of days ago to send some funds off of the new Eclair wallet, the transaction was "in transit/in flight" for three days at which point the channel closed and $6.75 of TX fees were taken out (even though the TX's on mempool.space suggest a fee of ~5¢ to ~25¢ is adequate)...

Three devices all with issues.

Maybe there is something wrong with your Tor configuration? Have you looked into the debug file to see which feature is not available? I used LND and c-lightning and I have never encounter such an error while opening a channel with clearnet nodes. By the way, Bitfinex's nodes refuse to accept channels lower than 0.04 BTC.

While I appreciate the information, I am bitterly disappointed to report my up-to-date Eclair is reporting "failed to open channel: Incompatible features"  (which is pretty much what almost all non-onion addresses come up with when I try to add a channel/node.

I expect if I tried with Zap, I'm going to get the same "incompatibility" error.

They are running bfx-lnd0 and bfx-lnd1 nodes. They even have a dedicated Lightning statistics page on which they share some interesting information. They have over 950 active channels, ~52 BTC incoming capacity and ~175 BTC outgoing liquidity.

There is no "we" here.

Some people want to know these kinds of things for a variety of reasons including being able to figure out growth or whether they might be able to make money by investing in a related business and even attempting to compare the good of one system compared to another... Maybe even wanting to improve one system versus another - or destroy (even though destroy comes off as negative).



People will still attempt to make estimates to the extent that it is feasible to attempt.  For example, if I started a cookie selling business and I was trying to figure out if it was worth it for me to attempt to use LN, I might set something up, and then compare it to my other options and maybe I am able to do both, or maybe I have to choose one path or another for logistical or manpower reasons.  There might be ways that I measure from my business, or I might ask someone if they are able to tell me the information that I need so that I do not have to expend resources that might be limited for me.



Various people know different things, and they have a variety of theories about what they know, too, whether it is the exact number of dollar users or the number of people using bitcoin, lightning network, coinbase, or some shitcoin.  Some people have better information than others, and sometimes they are able to make decisions and/or choices based on what they know or what they believe that they know.


Sure, there is a difference between transferring funds, such as bitcoin, between users within an exchange, such as coinbase or some other centralized exchange and if they are transferring coins off of (or onto) the exchange.  Even fillippone's post showed differing ways to transfer in and out of exchanges that may or may not be very traceable on the individual level to figure out quantity of coins moving back and forth, absent some kind of voluntary disclosure from an insider who might even be fudging the numbers if there is no way for us to be able to verify those representations (to the extent that they matter to one person versus another).

What LN node are they using?  I just did a search at https://1ml.com/search and came up with three different results.  All of which haven't been active in the last two to three years.  I thought I might try adding some exchanges to my Zap wallet to see if I can kick start it back to life.

I can think of a few reasons:
Back when I was testing Eclair, I noticed the channel reserve went up and down with on-chain Bitcoin fees. So I closed my channels when on-chain fees were low.
Since then, I'm only using BlueWallet (custodial) and Phoenix Wallet (from the same creator as Eclair: ACINQ). Obviously BlueWallet doesn't make me worry about channels, and in Phoenix Wallet I have several empty channels by now. If I close them, I lose the incoming capacity, while there's nothing I get out of it. So I have no reason to ever close them. But as long as I don't receive new LN-funds on those channels, the other party (the ACINQ node) has all funds "stuck" and can't use them anymore. So at some point I assume they'll want to close the channel.

Why should we know the number of users? I guess that on a decentralized network like LN, you can't know the exact number, you can't even approach it. But, is this a downside? Do we know the exact number of dollar users?

Correct me if I'm wrong, but Coinbase doesn't create on-chain transactions if you transact with someone using Coinbase wallet. They just change some variables in their database; some would say an IOU.

Instead of losing your privacy, the signatures could be encrypted using one of your derived private keys and then be uploaded anywhere you want. You'd remain private and you could access the signatures using the private key that is derived from your seed phrase.

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I have another question to make regarding LN; why would you ever need to close a channel? In the reality of El Salvador, people open a channel and each one transacts instantly using the channel's liquidity. If we assume that the liquidity is always enough to transact, why would someone want to close his channel?

I'm surprised by the size of the LN transactions: on average 0.011BTC per transaction is a lot more than I expected. And I would have expected more withdrawals than deposits, since on-chain withdrawal fees are high, while (most) exchanges don't charge a deposit fee. I can imagine the lack of incoming capacity limits how much users can withdraw (for now).
It's promising though, it's more than I expected.