Lightning Network 101

lightning network 101

Lightning Network 101

Disadvantages of the Lightning Network

Are we there yet?

Not really. Possibly the biggest disadvantage ascribed to the current state of the bitcoin lightning network is the lofty expectations from what is essentially a social experiment. It is not a fully operational bulletproof, foolproof, novice proof payment system … yet

The theory behind it looks good, but will the view change when realised into a real world solution?

The Maze

We think of the Lightning Network as sort of a web of channels which, once established, should theoretically allow for seamless transactions. However, there is no real-world data or simulation of how this will eventually play out. Variables such as capital cost & operational expense will have to be factored in somewhere by someone.

The “handy” Cap

A noticeable negative of the current network version is the concept of capped channels. This means the number of bitcoin stored in a wallet by the two parties upon establishing a channel is also the maximum.This configuration results in a situation where some users may have to choose between having liquidity within the Lightning Network channels or having liquidity on the main blockchain.

Back to the Future of Distributed Centralisation

Some people voice concern over the forming of ‘hubs’. The fear is that some nodes with a lot of capital will take a monopoly over that majority of transactions which will pass through. Some Bitcoin enthusiasts see this as further centralization of the network. There is however not much likeliness of such “hubs” making a substantial profit, and therefore no incentive.

These ideas are subjective and speculative propositions at best but reflect the real issues developers are aiming to solve.

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