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Why the Bitcoin Lightning Network is Satoshi Nakamoto’s Worst Nightmare.

CryptoWhale
CryptoWhale
Whenever someone brings up how slow and expensive the BTC network is, the most common counter-argument from a Bitcoin maxi is the Lightning Network — “BTC is superior! Lightning Network is instant, and has no fees!”
This is a typical red herring as it totally distracts us from Bitcoin’s faulty network by attempting to shift the attention to a corrupt and centralized third-party network, which isn’t even connected to Bitcoin at all.
In this article, I’ll be covering why the BTC Lightning Network is faulty, centralized, has many security vulnerabilities, and is Satoshi’s worst nightmare.
The Lightning Network is Centralized.
In Satoshi Nakamoto’s Bitcoin White Paper, he specifically points out in the abstract and introduction how the main benefits of Bitcoin are lost if a trusted third party is required. Lightning Network is just that.
Satoshi makes it very clear of the potential risks involved with moving to a third-party network, yet there’s a group of so-called “Bitcoin maximalists” that are undermining Satoshi’s true vision in an attempt to gain control.
The BTC Lightning network claims to use a network of micropayment channels that allows Bitcoin to scale to billions of transactions per day. But what they don’t tell you is that this only works through their centralized banking hubs.
In a recently published paper titled “Lightning Network: a second path towards centralization of the Bitcoin economy” (by researchers Jian-Hong Lin, Kevin Primicerio, Tiziano Squartini, Christian Decker, and Claudio J. Tessone) they found many red flags. By inspecting the evolution of the total capacity, researchers found many vulnerabilities in the Lightning Network protocol.
They found that about 10 percent of the nodes control 80 percent of funds on the network. This is dangerous because if most of the Bitcoin is held by only a few nodes, the network is more vulnerable to hackers because removing these routing nodes would leave gaping holes.
“Removing hubs leads to the collapse of the network into many components… suggesting that this network may be a target for the so-called split attacks,” potentially leading to lightning being divided in half.
Lightning Network Won’t Work on Global Scale
The Bitcoin lightning network capacity is defined as the amount of Bitcoin that the network can handle at any given time. For this platform to be used on a global scale, by billions of people, it would need to be scaled to unrealistically higher levels, which simply isn’t possible.
As of now, the network can only process around 2,800 Bitcoin, which is around 0.0001% of Bitcoin’s total supply. With the billions worth of Bitcoin being transacted daily, this just isn’t realistic at all.
Payment channels on the Lightning Network also need to be opened and closed by expensive L1 bitcoin transactions. The network can process ~2000 transactions/block and produces ~144 blocks/day, meaning that opening up a payment channel for everyone on earth would take ~72 years, assuming that no one died or had children during that time.
Bitcoin’s Volatility makes LN not feasible.
Putting all the other flaws aside, let’s just pretend the Lightning Network worked perfectly. Why would any person or company opt to use it?
Bitcoin’s extreme volatility is a massive turnoff for many, especially those interested in using it as a payment method.
The price volatility makes it challenging for companies to use Bitcoin as a method of payment when pricing their products to sell to their customers or even to purchase inventory from their suppliers.
Let me use an example to explain this better: Let’s assume the company “WhaleCorp” has to pay an invoice to their supplier of bitcoin. Typically, suppliers give their clients time to pay, such as 30 days. If bitcoin’s price has increased by 10% during the 30 day period, WhaleCorp has to come up with another 10% worth of fiat currency or another cryptocurrency to convert to Bitcoin and pay the invoice to pay the supplier.
This exchange risk exists because the business might be paid by their customers in a fiat currency and not Bitcoin. The exchange risk also exists for consumer transactions since the salary or wages for most individuals are not paid in Bitcoin, leading to transactions being converted from a fiat currency to Bitcoin.
The Lightning Network claims to have no fees, which would be amazing had their network not been fully centralized, and had Bitcoin not been one of the most volatile assets on earth.
El Salvador’s Use of The Lightning Network
You may have read the news. El Salvador recently became the first country in the world to adopt Bitcoin as legal tender.
A move applauded by most of the Bitcoin community turned out to be nothing more than an authoritarian regime’s grab for unprecedented control.
When El Salvador’s president, Nayib Bukele, showed his support for Bitcoin at the 2021 Miami Bitcoin conference, people were excited and thrilled.
What he didn’t mention was how people would be forced to use Chivo, a fully centralized LN wallet. In a recent tweet, Bukele said “Chivo isn’t a bank” and he’s right. Chivo is 1000x more corrupt, and centralized than any bank on earth.
The government now has full direct control over all of their citizens funds, and can turn their wallets on or off whenever they want. We saw this first hand when on the day they launched they quickly shut down due to “technical difficulties”
We’ve also received dozens of reports across social media of their transactions not going through on the lightning network. Why? Because the LN is only meant for tiny 1–5$ transactions, and nothing over $400.
A centralized network that limits people to spend only $400? Maybe I’m missing something, but how exactly is this a move up from the banks?
Vulnerabilities to Lightning Network
Independent Lightning Network developer Joost Jager has voiced many concerns about the network over the years. He claims while many features they’ve built are great, it does open up for some serious threats.
Lightning Network Vulnerability #1 : Griefing Attack
Jager’s thread details a so-called “griefing” attack” that has been possible since Lightning’s inception and affects normal and newly rolled-out wumbo channels.
Lightning channels execute payments on the network using a cryptographic function called hash-time-lock contracts (HTLCs). Lightning channels can only accommodate a few hundred HTLCs. Once this is maxed out the channel can no longer process payments — the funds would be stuck and the channel must be closed.
Griefing could be chaotic: Considering barely anyone is actually using the Lightning Network, this hasn’t been a big issue so far. But it could be…
It would allow attackers to freeze any Bitcoin deposited in the Lightning channel by spamming it with micropayments. While they wouldn’t be able to steal the Bitcoin, it could sabotage some else’s transaction.
Lightning Network Vulnerability #2 : Time-dilation eclipse
If an attacker were to spin up hundreds of nodes and crowd all of a Lightning full node’s connections in such a way that the victim is no longer connected to any honest users, the attacker can isolate that node from receiving real network data.
With the node’s connections “eclipsed,” the attacker can feed the node transaction data at a slower rate than normal. Once the attacker closes its Lightning channels with the victim, he or she could steal funds from that channel because its host node will not see the channel’s closing transaction on the blockchain because it is not receiving data quickly enough.
The attack is serious in that a victim could lose funds. That said, the attack does require the malicious actor to operate — and coordinate — hundreds of nodes to successfully eclipse a victim.
Lightning Network Vulnerability #3 : Pinning
Another attack that requires incongruent transaction data is known as a “pinning attack.”
To exploit this vulnerability, a sophisticated attacker blocks a channel’s closing transaction by broadcasting conflicting transactions to separate nodes with dissimilar mem pools. (Remember: There is no uniform pool for pending transactions on Bitcoin’s network; some nodes receive transactions others don’t base on the distribution of the peer-to-peer network connections, so each mempool is different).
Using a variety of techniques, one of which involves setting a low enough fee on a closing transaction to ensure it is not confirmed before the channel’s timelock expires, an attacker can trick a victim into closing his or her channels improperly, and thus steal individual transactions.
Conclusion
The Bitcoin Lightning Network isn’t just a failure. It’s a deceitful trap that goes against everything Satoshi Nakamoto built with the Bitcoin Network.
It’s commonly pushed for by hardcore Bitcoin maximalists who either have never read the white paper, lack any knowledge on how LN works, or are intentionally trying to lure in new users into a faulty and centralized scam.
With the recent news of Twitter adding a Bitcoin Lightning Network Tip Jar, people deserve to know the truth about this system in place, which I believe will face many failures in the future.
Thank you! My goal with this article is to share a unique perspective on certain topics. I’d love to hear your thoughts or questions, so feel free to reply with them. Have a great day everyone!
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