You may think I begin trolling now ... but I mostly agree with your analysis. I have discussed, above all, the "channel exhaustion" (=channels that lose the "routing power") problem with other users and no solution (that doesn't involve a centralized entity) has been found.

For me, LN was never more than a semi-centralized micropayment solution that is better than a totally-centralized online wallet because the "bank" cannot run away with my money. I would be happy if I can manage all my 0-20USD payments via LN and having at least 10 different hubs to chose from.

I essentially agree with your analysis.  I've said several times that instead of a small "economy of scale" with mining, which has already made mining an oligarchic business, the "economy of scale" in lightning is essentially proportional  to the amount of funds you can put into your links.  Which makes a HUGE advantage for whales, becoming central hubs: your bank.

In fact, the lightning network is PERFECT for your connection to your favourite exchange, which can act as one of the few central hubs in the world.  It has the advantage that the central exchange cannot run with your funds, like it does now, with an IOU.  Big exchanges can have bidirectional channels between them (the "banking back bone", swift-like), and as such, you can pay anyone through your channel to your exchange (you only need 1 channel with all your funds !), your exchange can transmit your funds to the exchange where your target is a customer, and that exchange will "push" the coins on your target's channel.  3-hop LN.

Of course, your exchange is now your bank, that can charge you with fees for using their banking service, can block payments to certain other people, knows all you do with your funds, etc.... but at least, compared to a normal bank, cannot run with your funds.... unless they can spam you out of the block chain for the time it takes to settle...

The LN is the missing technology that will turn centralized exchanges into world banks.

I'm not going to pretend to have the slightest clue how it pans out until there are a few actually up and running.



Whisper it, but most people would choose convenience over decentralisation most days of the week. Look at Coinbase.

Yes, exactly. And then look at all the alternatives. I'm not saying there won't be an unequal distribution of channels. I expect the efficient and good LN operators to dominate. But just as there are many smaller exchanges catering to people who have reason to reject or look beyond Coinbase, there will be alternatives to using major LN channels. We (as a community) just need to make sure the protocol is not co-opted to raise barriers to entry in handling Bitcoin TX, such as when miners try to prevent off-chain TX.

There is no point to decentralisation if it doesn't improve our lives in some way. If its more difficult and more expensive then I don't want decentralisation.

Do you want Bitcoin, then?


Bitcoin is difficult and expensive, and decentralised (although to be fair, Lightning will make it easier and cheaper, at least in terms of transaction fees).

It seems that the increasing number of people joining the Bitcoin holders and the Bitcoin network disagree with you. But by all means, make your own choice.

In the 2-layer model, the base letter is the settlement layer.  The problem is that if you force people not to use that base layer, it doesn't really matter what the layers on top will look like, because institutions become gatekeepers. 

It may be that things like sidechains are logistically much better than LN...but they will have all the same economic problems.

It just so happens that on top that (no pun intended), LN just can't work.

I like the article and the argument presented, although I thought that everyone was under the impression that any sort of LN system would have to have centralized nodes in order for something like that to work. You can't have a bunch of LNs running and get them to all go through as transactions without some sort of node that connects everything together, let it be a completely centralized node or a set of centralized nodes spread out which interact with each other.

I didn't realize you wrote articles, good job m8. I'm gonna see if I can read more of them in the future.

Define institutions. LN hub node operators? Also, wouldn't you still be able to use the raw Bitcoin protocol, albeit at a higher transaction cost?


Wouldn't the lower operation cost of a LN hub node also mean that it's easier to become one, meaning more hub nodes, meaning a lesser chance of censorship?