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Author Topic: Is the Lightning Network centralized?  (Read 1561 times)
Abiky
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April 23, 2018, 05:53:20 PM
 #1

Some say that the Lightning Network is centralized, but from my point of view, it's still a decentralized solution to scale Bitcoin as anyone would be able to run a Lightning node at will. The huge advantages that it provides for Bitcoin such as dirt-cheap fees, and instant transactions would be too hard to ignore to implement in the future.

However, if the Lightning Network turns out to become a centralized solution for Bitcoin (like many claims it will), then it would be doomed as only those with a lot of wealth and power would be able to participate in this ecosystem.

What are your thoughts about this? Is Lightning really centralized? Or Decentralized? Huh


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April 23, 2018, 06:03:09 PM
 #2

It's not centralized in any meaningful sense. If a hub in the hub-and-spoke network of LN channels ever becomes known as a problem then everyone can start routing around it. So long as blockchain fees for a single TX are not too high there's not much "locking" anyone into using a problem hub. And a bad actor operating a hub is very limited in what kinds of hijinks they can perpetrate anyway.

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April 25, 2018, 07:33:44 AM
 #3

I have been reading and studying a lot about this thing. Lightning network implementation sounds a good idea to everyone as it can save high transaction fees. But since the two parties directly transact with each other then i can say that it is a centralized in that way. There are still questions that are popping up in my mind like there are still expected shortcomings that may experience, then how can we resolve that issue?

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April 25, 2018, 07:44:23 AM
 #4

From my understanding, Lightning Network is a centralized platform that is built as a layer from Bitcoin which is decentralized. If lightning network fails then there can be many other systems that are tried out and the one that works the best will become the norm. If you don't like using a centralized platform you can always stick to the main chain. The fees might make you not want to though.

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April 25, 2018, 10:44:11 PM
 #5

It's not centralized in any meaningful sense. If a hub in the hub-and-spoke network of LN channels ever becomes known as a problem then everyone can start routing around it. So long as blockchain fees for a single TX are not too high there's not much "locking" anyone into using a problem hub. And a bad actor operating a hub is very limited in what kinds of hijinks they can perpetrate anyway.

You do have a point there, mate. The Lightning Network could be decentralized after all, if fees for opening a channel stay at a considerable level. If fees become high on the Bitcoin network, then it would greatly limit the ability for anyone to open a channel and start redirecting Lightning payments. Eventually, if Bitcoin doesn't increase its block size, this will become a huge problem even if Lightning Network's active, as the more channels are opened, the higher the load of transactions, resulting in greater fees over the long term.

Therefore, I believe that while Lightning Network is a good way to scale Bitcoin, it's not a permanent solution towards achieving said purpose. Bitcoin could gradually increase its block size over time, to bring in the full potential of the Lightning Network. Just my thoughts Grin


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April 25, 2018, 11:15:04 PM
 #6

I think lightning network is centralization, because this lightning network is a software that is not part of blockchain system, but if bitcoin protocol applies lightning network, it can include global financial transaction volume faster, and cheaper cost.

This lightning network is just a part of the software that makes use of decentralized blockchain protocols and serves to minimize transaction size.

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April 25, 2018, 11:38:30 PM
 #7

It's not centralized in any meaningful sense. If a hub in the hub-and-spoke network of LN channels ever becomes known as a problem then everyone can start routing around it.

that's not necessarily true. if a hub-and-spoke topology emerges, it doesn't follow that LN nodes will magically become distributed if hubs act dishonestly. avoiding those hubs might just make some LN payments more difficult or impossible to route. if bidirectional connectivity across the network is lacking, you can't just "route around" connected hubs. that can mean your payment not getting routed at all.

it's not a huge issue because there is no trust involved---no funds are at risk from counterparties. but i wouldn't overstate how connected nodes on LN are.

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April 26, 2018, 02:58:55 AM
 #8

Some say that the Lightning Network is centralized, but from my point of view, it's still a decentralized solution to scale Bitcoin as anyone would be able to run a Lightning node at will. The huge advantages that it provides for Bitcoin such as dirt-cheap fees, and instant transactions would be too hard to ignore to implement in the future.

However, if the Lightning Network turns out to become a centralized solution for Bitcoin (like many claims it will), then it would be doomed as only those with a lot of wealth and power would be able to participate in this ecosystem.

What are your thoughts about this? Is Lightning really centralized? Or Decentralized? Huh

I think large hubs appear because people want to connect to nodes that are always online and already have many connections, since it can result in shorter routes and thus cheaper fees. So, if we think about nodes/hubs as some sort of payment processors, there are still a lot of differences between them and traditional payment processors - they can't freeze or steal your coins easily, because Lightning protocol has strong anti-cheating mechanisms. You don't have to use hubs if you don't want to, you can always choose some alternative routing or just connect with someone directly - this is not possible with fiat, since you can't just start your own small bank.

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April 26, 2018, 03:14:40 AM
 #9

in my opinion the key is in "who can run a lightning node/hub?" as long as it is anybody who wants (which is the case and now there is incentive to run a node) then i don't see any kind of centralization in this. you are still connecting to a peer to peer network and making a transaction on it. just like any other p2p network there may be peers by banks, government, shady people, normal people,... but the good thing that i understand about LN is that the relaying nodes don't know about the origin and destination of the transactions they receive, they just pass it along and know it doesn't belong to them.

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April 26, 2018, 04:07:39 AM
Last edit: April 26, 2018, 04:36:37 AM by franky1
 #10

I think large hubs appear because people want to connect to nodes that are always online and already have many connections, since it can result in shorter routes and thus cheaper fees. So, if we think about nodes/hubs as some sort of payment processors, there are still a lot of differences between them and traditional payment processors - they can't freeze or steal your coins easily, because Lightning protocol has strong anti-cheating mechanisms. You don't have to use hubs if you don't want to, you can always choose some alternative routing or just connect with someone directly - this is not possible with fiat, since you can't just start your own small bank.

firstly
in channel. there is NO community audit/ checks of payments. is just counter-party A vs counter-party B

this leads to a few issues. counterparty-B can (because its open source) edit his own node so that it is the handshakee.. meaning cpA has to offer their hand first(sign first)
if cpB received cpAs signature of lets say tx3, but then cpB was to refuse to sign tx 3. and then cpB went on to DDoS cpA..
cpB can blackmail cpA because

if cpA broadcast tx2(the only fully signed tx cpA has) cpB could the sign tx3 broadcast tx3 and csv revoke funds away from cpA
..
secondly
you say its not like traditional banks.. pfft
there are 1600 nodes right now. and there are some hubs with over 100 channels.. (upto 10% co-signing control of nodes funds)

imagine a town of 160,000 population and there were 10 bank branches. people open accounts(channels) with a bank branch and then every payment they make the customer needs:
1. bank branch authorisation (counter party sig of the customers<->bank(person/hub) channel)
2. wire transfer authorisation (counterparty sig of the 2 banks(routed hubs) channel)
3. remote branch authorisation (counterparty sig of the remote bank<->recipient(hub/person) channel)

if you take away the buzzwords of channel and replace it with account.
if you take away the buzzwords of mutlisig counterparty smart contract and replace it with requires bank authorisation
if you take away the buzzwords of routing and replace it with wire transfer using bank route/sort codes
if you take away the buzzwords of CSVrevoke and replace it with chargeback
if you take away the buzzwords of CLTV and replace it with 3-5 business day settlement
even the letter C in CLTV and CSV is misleading
if you take away Check(its not meaning validate) and replace it with Cashiers Cheque

you will see exactly what business model LN is copying


....
thirdly
with the costs of initial deposit per channel and offsetting some funds for routing/penalties/onchain closing tx fee.. it is not
cheap to set yourself up as a well established 'bank'.. only the few well funded people will (which has already started to become noticable now)

fourthly
imagine average joe only wanted to use $60 in LN as a risk.. setting up 30 channels means only $2 can be spent. and not all of them will route to starbucks. also. the nodes he connects to that might also have done something similar may have already spent their $2 on th available route to star bucks meaning there is nothing in the routes to hop payments through even if a chain of channels could be found

meaning lots of channels then had to close(onchain) to then re open new channels to re-jig the funds around. which is all done on chain.
LN is not as seemless and open and limitless as people think. devs are still just knocking the kinks out of establishing connectivity(account application forms/handshaking). but yet to even consider/think/run scenarios of costs of running/maintaining and how often/how spread out peoples funds get to require closing/opening channels often

fifthly
thinking that if a node is dodgy. then its a split second decision to move on, is wrong. flawed and naive
its like finding out your bank messed you around. you funds dont instantly become cash in hand. they need to be thrown back onchainCLTV(3-5business day settlement). and then you need to open a new channel and fund the new channel via yet another onchain fee

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April 26, 2018, 04:08:26 AM
 #11

Some say that the Lightning Network is centralized, but from my point of view, it's still a decentralized solution to scale Bitcoin as anyone would be able to run a Lightning node at will. The huge advantages that it provides for Bitcoin such as dirt-cheap fees, and instant transactions would be too hard to ignore to implement in the future.

However, if the Lightning Network turns out to become a centralized solution for Bitcoin (like many claims it will), then it would be doomed as only those with a lot of wealth and power would be able to participate in this ecosystem.

What are your thoughts about this? Is Lightning really centralized? Or Decentralized? Huh

Hate to break it to you,

But Lightening entire design was meant to centralize control of bitcoin by the elite banker that can afford to lock up the majority of bitcoin, by just printing more useless fiat.

Also even Bitcoin itself has been centralized for years to the wealthy elite that can afford warehouse full of ASICS.
Chinese Mining Pools alone had more than 51% control for years.
Centralization of bitcoin happened years ago and no one seemed to care.  Tongue  

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April 26, 2018, 04:42:33 AM
 #12

Also even Bitcoin itself has been centralized for years to the wealthy elite that can afford warehouse full of ASICS.
Chinese Mining Pools alone had more than 51% control for years.
Centralization of bitcoin happened years ago and no one seemed to care.  Tongue  

pools cant do much. if they sent out a nasty block.. nodes would reject it in seconds. and then the pools cant spend thir funds because merchants wont see that block.

however. since 2014. CORE have centralised the roadmap in their own direction. and any other team/community member that thinks of an idea that differs from cores roadmap gets treated like an enemy...

so yes centralisation has happened years ago. but no one notices because each time its highlighted, all that occurs is distractions of.. "look at craig wright. he owns no bitcoins, never coded a node, doesnt have any influence but look, look at him until you forget that core control the network"

much like USA is bombing syria.. "but look kardashian is on a 3 day clense"

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April 26, 2018, 06:41:29 AM
 #13

Some say that the Lightning Network is centralized, but from my point of view, it's still a decentralized solution to scale Bitcoin as anyone would be able to run a Lightning node at will. The huge advantages that it provides for Bitcoin such as dirt-cheap fees, and instant transactions would be too hard to ignore to implement in the future.

However, if the Lightning Network turns out to become a centralized solution for Bitcoin (like many claims it will), then it would be doomed as only those with a lot of wealth and power would be able to participate in this ecosystem.

What are your thoughts about this? Is Lightning really centralized? Or Decentralized? Huh

Are you trying to make up something to spread FUD? Did you bother to take some time to read and understand how LN works?

But please explain. How did you come to the conclusion that "only those with a lot of wealth and power would be able to participate in the Lightning Network". Let's see if you yourself understood what you have posted.


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April 26, 2018, 07:05:18 AM
 #14

If lightning network is going on centralization of bitcoin then i think this out of the code that created by satoshi if bitcoin goes like that in the future there is now deferent in the government itself that controls people money and only wealthy people can control this.

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April 26, 2018, 08:58:08 AM
 #15

in my opinion the key is in "who can run a lightning node/hub?" as long as it is anybody who wants (which is the case and now there is incentive to run a node) then i don't see any kind of centralization in this.

what's the incentive? how much can you expect to make in fees? i guess it matters how well-connected your node is. you have to weigh that incentive against the risk of keeping your private keys online too.

but the good thing that i understand about LN is that the relaying nodes don't know about the origin and destination of the transactions they receive, they just pass it along and know it doesn't belong to them.

indeed. i do like the idea of private, off-chain transactions. that's definitely one of the appeals of LN for me.

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April 26, 2018, 11:14:13 PM
 #16

in my opinion the key is in "who can run a lightning node/hub?" as long as it is anybody who wants (which is the case and now there is incentive to run a node) then i don't see any kind of centralization in this. you are still connecting to a peer to peer network and making a transaction on it. just like any other p2p network there may be peers by banks, government, shady people, normal people,... but the good thing that i understand about LN is that the relaying nodes don't know about the origin and destination of the transactions they receive, they just pass it along and know it doesn't belong to them.

You do have a point there, mate. Anyone could leave or join a Lightning node at will, in a decentralized fashion. However, there's a thing that might concern LN node operators which involves regulation. I've seen an article over the web which says that Lightning node operators could be classified as Money Transmitters which fits on FINCEN's regulatory presence.

The article can be seen here: https://medium.com/@curt0/lightning-network-will-likely-fail-due-to-several-possible-reasons-336c6c47f049

If that happens, then only banks and registered institutions as money transmitters within the FINCEN would be able to operate LN nodes. As such, it could make such protocol centralized rather than decentralized. I know that relaying nodes won't be able to know the origin of transactions (which does not abide by KYC or AML regulations) but FINCEN could easily classify LN nodes as money transmitters, the same way the SEC classified ICOs as securities.

Therefore, anything could happen once the Lightning Network becomes used at a wide scale in the mainstream world. Just my thoughts Grin


Are you trying to make up something to spread FUD? Did you bother to take some time to read and understand how LN works?

But please explain. How did you come to the conclusion that "only those with a lot of wealth and power would be able to participate in the Lightning Network". Let's see if you yourself understood what you have posted.

I'm not trying to spread FUD here but just saying what I believe that it would happen in the future. As more channels are opened simultaneously, fees on the main network could rise up to a point where only wealthy people could open them. As such, Bitcoin would also need to increase its blocksize to prevent fees from rising after many requests for opening channels (as a transaction would be made on the main chain to open a channel).

At least, that's how I see it, although I could be wrong. If fees stay at the minimum on the main chain, then there's no doubt that the anyone would be able to open channels within the Lightning Network at will. Smiley


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April 27, 2018, 03:28:15 AM
 #17

in my opinion the key is in "who can run a lightning node/hub?" as long as it is anybody who wants (which is the case and now there is incentive to run a node) then i don't see any kind of centralization in this.

what's the incentive? how much can you expect to make in fees? i guess it matters how well-connected your node is. you have to weigh that incentive against the risk of keeping your private keys online too.

for years people have been running bitcoin nodes but some of them have been complaining that there should be an incentive for it. the fees can be that incentive they were looking for. they may not be a lot but it is still viable. the thing is people have never been getting paid before and they were running nodes but now they have that perk.

You do have a point there, mate. Anyone could leave or join a Lightning node at will, in a decentralized fashion. However, there's a thing that might concern LN node operators which involves regulation. I've seen an article over the web which says that Lightning node operators could be classified as Money Transmitters which fits on FINCEN's regulatory presence.
maybe true. but first they have to consider bitcoin itself as money so that those who are processing its transactions to be "money transmitters". and so far only a handful of countries have considered bitcoin as money. for example US considers bitcoin as commodity so how can they consider its transactions as monetary?

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April 27, 2018, 03:39:02 AM
 #18

Lightning network not simple how you think,
Yes node working how centralized system, but all players in LN secured from centralized control and i cant say what is centralized.

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April 27, 2018, 06:03:06 AM
Merited by ebliever (5)
 #19


Are you trying to make up something to spread FUD? Did you bother to take some time to read and understand how LN works?

But please explain. How did you come to the conclusion that "only those with a lot of wealth and power would be able to participate in the Lightning Network". Let's see if you yourself understood what you have posted.

I'm not trying to spread FUD here but just saying what I believe that it would happen in the future. As more channels are opened simultaneously, fees on the main network could rise up to a point where only wealthy people could open them. As such, Bitcoin would also need to increase its blocksize to prevent fees from rising after many requests for opening channels (as a transaction would be made on the main chain to open a channel).

I believe Adam Back said that increasing the block size is already an absolute for the future of the network. But what Bitcoin Core will not do is to increase the block size to satisfy some group's political agenda.

Quote
At least, that's how I see it, although I could be wrong. If fees stay at the minimum on the main chain, then there's no doubt that the anyone would be able to open channels within the Lightning Network at will. Smiley

Everything is ok so far with Lightning Nodes surpassing Bitcoin Cash nodes in number. Hahaha.


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April 27, 2018, 12:55:39 PM
 #20

Some say that the Lightning Network is centralized, but from my point of view, it's still a decentralized solution to scale Bitcoin as anyone would be able to run a Lightning node at will. The huge advantages that it provides for Bitcoin such as dirt-cheap fees, and instant transactions would be too hard to ignore to implement in the future.

However, if the Lightning Network turns out to become a centralized solution for Bitcoin (like many claims it will), then it would be doomed as only those with a lot of wealth and power would be able to participate in this ecosystem.

What are your thoughts about this? Is Lightning really centralized? Or Decentralized? Huh

The Lightning Network will probably have top-notch privacy features. It will be much more anonymous than ordinary Bitcoin transactions.
Some businesses will run cheap Lightning Nodes to collect and sell data. Lightning users can either use these low-cost lightning nodes,or, use higher-cost, more privacy oriented payment channels.If the network is built by an organisation my take is it will be centralised

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