Have we wasted time with the Lightning Network?
I'm pro Lightning Network but I it's important to ask these questions and analyze how to improve the experience. In the end if we do it right, we might be able to onboard more people into Bitcoin
Before you leave my blog and head over to Twitter to mock me, remember that I chose that headline to provoke a reaction.
I’m not one of the Lightning haters; I use it more than on-chain transactions. But it’s essential to be critical and constantly analyze what we can do better.
Which is precisely what this article is all about. I want to address some of the struggles I’ve seen and what I feel we can do better to adopt more people onto the Lightning Network.
The story of the Lightning Network
Before I can get to the trouble, let’s look at the story of the Lightning Network so far. Although it has been trending in the past two years, mainly through hype tweets that say Lightning is bringing Bitcoin to the masses, it has been around longer than that.
It all began with the now infamous blocksize war. Back then, a group of people wanted to increase the block size; they would eventually hardfork and create Bitcoin Cash or Bitcoin Satoshi’s Vision. The other side wasn’t willing to change and remained with the smaller block size. The war was over with a sacrifice from the small block camp with the introduction of Segwit.
This was the first significant protocol upgrade for Bitcoin. It stands for Segregated Witness and was activated in August 2017. It aims to solve some of Bitcoin’s scalability problems. In short, it enabled a different block structure for every Bitcoin block, adding 3 MB more information or witness data to each block. This prevented a hardfork and added more data capability to the original 1 MB block. It also enabled layer solutions on top of Bitcoin.
Which is where the Lightning Network comes in. It first popped up in 2015, gained traction in 2018, and has constantly been in development. I got in touch with it in 2019. The idea is simple; to enable faster payments, the network uses Bitcoin as a base layer, settles all the payments off-chain in payment channels, and allows more solutions to use in everyday life. On that note, I know that the Lightning Network sacrifices some security models, but this is always the sacrifice we make with scalability solutions.
I was fascinated with the Lightning Network because the idea seemed so simple and ideal for users worldwide who didn’t want to wait long for their low-fee transaction to settle on-chain. All you had to do was open a payment channel, add liquidity, and find someone on the other side willing to do the same. If Bitcoin should be used as a payment solution, we need different possibilities to send value around the globe.
With the pandemic in 2020, we saw a massive influx of new Bitcoin users, and the demand for Lightning increased as well. Start-ups and new Lightning companies pop up everywhere. This also sparked new development and new possibilities for to use of the Lightning Network.
The problems we’re currently facing
This interest in new possibilities or different solutions is the biggest problem with the Lightning Network. We have too many choices. I don’t mean to offend any Lightning developer because this must be heaven to all of them.
I’m talking about regular users. The ones interested in dabbling around with Lightning but run into the same issue; where to start? I would categorize myself as one of them. Lightning currently has a couple of implementations to work with:
Rust-Lightning and LDK
Electrum with a Lightning implementation
Node-Lightning, formerly LNTools
We recently read about Block getting into the Lightning game with their project called C=. However, it’s still unclear if this will be an implementation or not.
As you can see, there are a lot of choices with which implementation you can work. All of them have certain advantages or can be used for different reasons. Some might be used to create a B2C payment client, while others are great for personal wallets.
This list is just to show the different implementations. You also have some choice in how you run your Lightning node. All in all, the Lightning field feels huge, but if you take a closer look, it’s small compared to other projects. For example, there is more Bitcoin in Whirlpool than in public Lightning channels.
As I mentioned above, there is a sacrifice in security and centralization with Lightning. This often leads to heated debates and even less development for the end user. Instead of finding common ground, we end up in a shouting match on Twitter.
I’m not going to lie; I have not used many different Lightning solutions for that reason. And I understand the principle of how things work. An everyday user doesn’t know what we talk about and either sticks to on-chain or leaves the space ultimately, which is not what we want.
Have we wasted time or not?
That’s the main question we have to answer. Have we, as the Bitcoin community, wasted time with the Lightning network? Are there better solutions, or will Bitcoin remain a slow tool?
I can’t speak for everyone, but if I had to give a definite answer to this, I would say no. We have not wasted time with the Lightning Network.
Sure, there are too many implementations out there, and it’s still wacky as fuck, but there are legit use cases for using it. Whether that be to pay for my coffee at the cashier, use it to pay someone for a great episode in a podcast, pay family and friends for my share in the Uber ride, or even get paid by a client.
These things have one thing in common; micropayments and the need to send smaller amounts or repeat the same payment often. These are technically possible with on-chain, but those payments will be expensive if we get to mass adoption.
I compare the current state of Lightning to the early days of credit cards and online payments. There are a lot of choices, most will probably not be around, and user feedback is lacking because we focus on too many details.
The following 24 months will define the success of the Lightning Network. The more we see it implemented into products and people use it without realizing it, the better for the project. After all, it has been in use for five years now, and we slowly but surely get to that first critical stage where a small concentrated group of users tests it.
I know how amazing it is to use and urge everyone to get on board. Compare all the implementations, be harsh in your feedback, and don’t hesitate to call out BS. The more people do this, the more evident the project’s direction will be; in the end, the more people use it.
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By any measure, the lightning network *has* been a success.
But, as other have noted, the true bifurcation will be between the sovereign nodes run at home or on online servers by plebs, and the vastly larger custodial nodes that will host services for users, thinking of Alby, Cash App, Wallet of Satoshi, and even Fountain App for podcasts.
Most of home node runners just cannot compete with the liquidity and channel routes run by these custodial services, so it's difficult to immediately onboard someone without having to recommend them. I like the go-between method offered by Breez, or even the flexibility of Phoenix, and I do think this is where the majority of the lightning network will eventually end up. That actually has some advantages (privacy, mostly anon nodes, built-in lightning paths, easier path to liquidity, etc.), but almost means the higher chance for rugging because of bugs or malfeasance, as well as a "blackboxing" of the entire lighting experience (opening channels via on-chain transactions, etc.)
I think it's a great second-layer and does serve us well, but it's only a building block toward creating a more complete "user experience" — lightning users of the future will never have to balance liquidity or struggle to keep their node synced, for instance.
The development work has only begun, and I'm excited for the future. The demand is there, we just need to make sure there is workable supply for the next round of onboarding.
Great piece! I went through similar thoughts on our site, and I'm hoping to stay positive.