A bitcoin maximalist’s sharp criticism of the Lightning Network

The Lightning Network is why Bitcoin will be legal tender in El Salvador. The main chain couldn’t serve an entire country without a fast and reliable payment channel built on top of it. It’s that simple. But is the Lightning Network invulnerable to attacks? Is its architecture as bulletproof as Bitcoin’s main network? Not after the technical expert Shinobi, who calls it “a toy“And urges us to stop pretending to”the shape of the future.“Ouch.

Write something about Lightning. Lightning people are likely to get mad.

– Shinobi (@brian_trollz) August 3, 2021

At Bitcoinist, we tries to explain how the Lightning Network works. We gave you Reasons why it will keep growing. We compared its energy consumption to the rest of the world. And now it’s time to criticize it. Because we’re a fair and balanced release and we’re committed to exploring every corner of the story.

Make no mistake, Bitcoin works as a monetary network because all the incentives are in exactly the right place. It’s a miracle. And according to Shinobi, we can’t say the same thing about The Lightning Network.

The Lightning Network has an incentive problem

Shinobis Essay starts with a bang:

The overall design goal of the Lightning Network is to allow for the atomic routing of payments between parties who don’t have direct payment channels between themselves, and this is literally impossible without the economic incentive that routing fees provide, unless you rely solely on altruistic charities leaves motivations.

The way Shinobi sees it, The Lightning Network relies on altruism instead of greed. And such a network cannot thrive. Of course, he says it in a more colorful language:

In its current form, Lightning is nothing more than a children’s toy. Period. It’s not a sophisticated system, a magical UX or UI, it’s not even robust or solid against enemy attacks. It’s one goddamn toy put together by a group of friends and cared for only because that’s mostly what it’s made of. Friends. Companies that know each other. A close social group that has not yet grown beyond a socially scalable size.

Take off your kids’ gloves and tell us how you really feel, shinobi. My goodness.

Another characteristic of Bitcoin, the currency network, is its invulnerability. It contains the biggest honeypot the world has ever seen and no one has been able to hack it or take advantage of it so far. According to Shinobi, that can’t be said about the Lightning Network. That “opposing screws weren’t even installed.“And he’s worried about the types of attacks it’s susceptible to. And about the “very real economic incentives that inevitably create units that are in the perfect position to exploit these types of attack.

BTC price chart for 08/20/2021 on Bistamp | Source: BTC / USD on TradingView.com

Vulnerabilities and possible attacks

  • The first class: Passive Privacy Leaks.According to Shinobi, if you have control over multiple nodes, you can potentially learn a lot from the payments that go through them. “First, there are the decreasing timeouts. This way I can both guess how many hops the first node I am routing that is involved in the payment is from the point of origin and how many hops from the destination the last participating node I am running is.
  • The second class: actively exploring channels through payments“A hostile actor could find out how much bitcoin a channel contains by constantly examining it. “If you take regular snapshots like this, you can start playing summing games in global channel balance shifts and guess cash flows with much better accuracy because your snapshots let you know the distribution of the channel balance over time.
  • Shinobi is also worried about “Income hunt“Platforms like BlockFi and Ledn. They would make any deal “to outperform the market.”“In this possible future scenario, this entity would be able to carry out a systemic private attack on a certain percentage of the entire Lightning network. This would also have an economic incentive. This information is economically valuable, as the existence of chainanalytics companies shows.

Conclusions and solutions

We strongly recommend for those interested in technology read the original article. Shinobi goes deep and explains the weak points in great detail. We have done our best to simplify the concern. The text ends with a call-to-action:

If you don’t want Lightning to be a market-force-organized network with profit incentives … well … make it something else.

What is fair.

In the comments, Rene Pickhardt, co-author of the book “Mastering the Lightning Network” with Andreas Antonopoulos, made use of his right to reply:

I think it is rather unlikely that a single entity is regularly on many hops of a path. Even with probabilistic pathfinding and optimal cash flows, we see the chance that a fee market for the provision of liquidity will arise.

Which is also fair.

Featured image by Keli Black from Pixabay – Charts from TradingView

Comments are closed.