Lightning Network is not a panacea

According to experts, with the implementation of the Lightning Network protocol, the performance of the first cryptocurrency system will significantly increase due to operations outside the Bitcoin distributed ledger. For a long time, the progressive technology was shelved, but at the moment there are already 2,155 nodes using more than 5.5 thousand channels of the alternative network. Thus, almost every fourth node of the main cryptographic asset "felt" the benefits of the innovation.

Even relatively small support no longer bothers Lightning fans who see innovation as a salvation from deep-seated problems. But do not expect revolutionary steps, as the technology continues to be refined. One of the ideological masterminds of the alternative network Thaddeus Dryya admits that his brainchild is not yet ready for widespread use. It makes no sense to prove the effectiveness of the concept, since it has already proved its superiority in practice. At the moment, Mr. Draya calls the idea of Lightning crude, so he believes that it is too early to apply it massively in the Bitcoin blockchain. With the spread of the Lightning Network, there are several challenges to face.

Technology cannot eliminate the problem of high transaction costs

The volatility of Bitcoin negatively affects transaction fees, as a significant increase in the rate of the main cryptocurrency leads to an automatic increase in the cost of fees in the equivalent of fiduciary currencies. In addition, the increase in the cost of operations occurs due to network congestion. The latter factor will be significantly weakened if most of the transfers are made outside the main blockchain. Due to the huge flow of transactions, there is an increase in commission fees. But transaction fees are included in the cost of using the Lightning Network.

The price for transfers consists of two components. First of all, you pay for the creation and closure of channels, carried out by two nodes. In addition, the transfer of funds between them has a certain cost. At the moment, no commission is charged on operations, since too few nodes support the technology. Mr Dryya suggests that the availability of transactions outside the blockchain will continue as long as the network remains scalable.

The Lightning Network Protocol is not able to significantly affect the size of commission fees, as the latter depends on many reasons. According to the developer, payments for cryptocurrency transfers may increase, which will prevent the introduction of technology on online trading platforms. In the case of altcoins, other scenarios may be used. Dash offers free software products for in-store deployment. Payment system CEO Dash Ryan Taylor shared that one of the companies supporting his cryptocurrency is compensating sellers for the costs of using new payment methods.

Risks from missing nodes

The Lightning network implies that the nodes are regularly online. These nodes must be constantly responsible for receiving and sending payments, as well as the safe storage of digital coins. This requirement increases the risk of fraud and break-ins. Due to the server going offline, the Lightning Network is facing serious problems. According to Mr. Drayi, with the disappearance of one of the nodes, the second gets the opportunity to withdraw funds, and this trick is no different from a fraud. There will remain a small period during which it is possible to appeal the loss of funds, but after some time the digital assets cannot be returned.

The Lightning Network protocol will crash if some of the nodes go offline. Mr. Taylor says the main problem with the new technology is its tendency to over-centralize, as funds are used by specific network nodes. Thus, at any time, a large number of tokens can be lost or frozen for some time in the event of a breakdown of one of the servers.
Lightning Network will not be a panacea for network effects

As a result of the emergence of the Lightning network, Bitcoin can be used for everyday purchases. Customers will be able to open their own payment channels with separate trading platforms or other people to exchange funds. For example, you can use digital coins to pay for utilities or any purchase. However, it is too early to talk about the global spread of Bitcoin. And the increase in the cost of operations is associated with an increase in trading volumes. Therefore, the Lightning Network will only indirectly affect the change in the size of commissions.

Garrick Hieleman, founder of digital payment system Mosaic, who researches cryptocurrencies, has doubts about the widespread adoption of transactions outside the blockchain. Due to the volatility of Bitcoin, it is unlikely that anyone wants to store funds in virtual assets to pay for housing and other everyday expenses. Mr. Hieleman points out that today only a few companies give salaries in digital coins. Investors are ready to invest in Bitcoin with a long-term perspective, but in day-to-day use they prefer fiduciary funds.

What are the benefits of Lightning for the main cryptocurrency?

Despite a number of shortcomings, the alternative network is not yet well developed, so it is too early to jump to conclusions. It is worth evaluating the Lightning Network not as a replacement for the Visa payment system, but as a useful financial tool. And in the future, there will be other products like SegWit that can improve the mainstream cryptocurrency network. At the same time, developers continue to work on improving the technology. Mr Dryya believes his payment channels will accelerate micro-trading operations and help online platforms. Attempts are also underway to combat channel closure fraud. In such cases, the user will simply be able to collect their assets. The idea of the "Watchtower" assumes, in the event of one of the nodes leaving, the analysis of the transaction by other network servers.

Thus, the Lightning Network protocol remains a promising development that will positively affect the Bitcoin blockchain. But dont hope that technology will solve all existing problems. It will be a useful tool that will provide a platform for further research.