Bitcoin has come a long way from those early days when people believed BTC provided them anonymity. Today, BTC users are aware that every transaction they make is tracked on the blockchain and privacy concerns are a growing issue within the community. The institution of the Lightning Network could help to alleviate some of these concerns as developers continue to mull over what features are essential to this new protocol.

The Lightning Network – Privacy Concerns

The Lightning Network has been hailed by many as Bitcoin’s saving grace. This innovative technology has the potential to eliminate the high transaction fees and scalability issues that currently plague the world’s first cryptocurrency. This amazing task is accomplished by performing a portion of your transactions off the BTC blockchain.

This second layer protocol could be exactly what BTC needs to regain some of its lost market dominance and while the technology is truly impressive, developers are still working out additional privacy concerns the use of this protocol could potentially raise.

Lightning Nodes

The Lightning Network depends on a network of Lightning Nodes to accomplish its tasks. Privacy experts have voiced concerns over the ability of a node to pry into the contents of a potential transaction. This could lead to a bad node attempting to sell this information to governments or corporations. This situation could be exasperated if the Lightning Network develops similarly to BTC in that there are large centralized nodes that control a significant portion of transactions being processed.

This style of “hub-and-spoke” network development occurs due to the high startup cost of starting a node and it is a big problem currently seen in the BTC mining industry; who has been usurped by large government and corporate mining operations. This has made it less attractive for an individual to mine BTC, leaving the entire network more centralized.

Privacy Concerns – Try an Onion

Lightning developers have been working frivolously on solutions to these problems with the most prominent being the introduction of an advance onion routing system. Onion routing protocols work by passing your payment information through multiple channels while reducing the amount of information each node receives. By encrypting the majority of the data sent and using multiple layers, nodes will not have the ability to be selective in the transactions they confirm.

If Onion routing sounds eerily familiar, it should, it is the same type of protocol used in the now infamous Tor Network. The addition of this protocol will help to prevent the formation of large selective nodes. Developers are keen on avoiding a situation in which nodes have the ability to arbitrarily deny or accept transactions.

Network Hacks

The second major privacy concern being addressed by developers is the possibility of a large real-time network monitoring entity. In its current state, Lightning Transactions are given a fixed identifier that could potentially be used to track a transaction. To combat this potential tracking nightmare, developers are considering a number of different options.

Adding Encryption Options

The Lightning Network may be forced to add an additional layer of cryptography to the protocol to prevent large-scale monitoring attempts. The downside of pursuing this strategy is that the encryption protocol adds a significant amount of data that needs to be sent with every transaction. Developers are keen on trying to avoid slowing down Lightning Network transactions with heavy coding.

Random Channels

Another option on the table is the institution of random channels. This strategy would work by only allowing random payment channels to operate at certain times. This could help to prevent large hubs from forming on the network as well. It is likely a combination of these options will be incorporated into the finished Lightning Netrork protocol in order to maximize privacy without slowing down transaction times.

What Do You Think Bitcoiners…..will all of these privacy concerns delay the launch of the Lightning Network even longer or are we close to the glorious day of zero-fee transactions?