Here is a January 2018 graph of the Lightning Network:

Now here is a current graph of the Lightning Network:

Yes, these are representations of the exact same network — the Bitcoin Lightning Network — only 11 months apart.

In less than a year the network increased from 40 channels to more than 15.000. From 30 nodes to more than 2000.

In January the total value committed in LN channels was less than 1 BTC and since then it increased to more than 500 BTC (2.000.000 USD).

Meanwhile, every time a graph like this is posted some people fail to see the obvious success story behind it and prefer to indulge in the game of eyeballing how centralized/decentralized is the Lightning Network.

Well, I do value leisure activities as much as anybody else, but shouldn’t we be asking:

What are the adverse effects of Lightning Network centralization? How much decentralization is enough or acceptable?

Worrying so much about the topology of a network being hub-and-spoke, a perfect mesh of nodes or whatever regardless of context makes me think that decentralization is already being thrown as just another buzzword.

Don’t get me wrong, I do value decentralization!!

I just don’t see the value of pursuing it just for the sake of decentralization itself.

Are CryptoKitties better than real kitties just because they are decentralized?

Look at him. Ugh! He is so centralized.

You get the picture. Just because we value decentralization in a particular context doesn’t mean that we should value it in equal measure in a totally different one.

So the main two points I would like to make are:

The fact that there are some highly connected nodes doesn’t make LN centralized. The adverse effects of centralization in the LN are not so bad as in the underlying layer (Bitcoin layer).

I won’t bother that much defending point 1 above. It has been done before. Instead I will focus on the second point:

The adverse effects of centralization in the Lightning Network are not so bad as in the underlying Bitcoin layer.

To effectively contrast both networks I will start by focusing on the Bitcoin network.

Why do we need decentralization in the Bitcoin network?

Bitcoin was carefully designed to avoid trust.

In Satoshi Nakamoto’s own words:

What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.

If people stop running their nodes and start blindingly accepting what blocks miners feed them then we are back to trusting third parties.

Giving up on decentralization for some shallow goal like reducing transaction fees leaves us with just a slow, inefficient, and overall useless Bitcoin network.

There’s no way we can give up on decentralization without giving in to the trustful model!

Keeping the trustless peer-to-peer model should be our main goal and that ranks decentralization of Bitcoin nodes as the most important property of the network.

So what about the Lightning Network?

Lightning Network is just a way to route valid Bitcoin transactions between multiple users without counterparty risk.

In most cases, these valid Bitcoin transactions, instead of being broadcast to the Bitcoin network, are kept off-chain on users’ machines so they can be revoked and replaced by new ones reflecting an updated balance of BTC between the users.

This removes the need for every node in the Bitcoin network to validate every single Bitcoin transaction. Transactions are still validated, but only by the involved users.

It also removes the need for every transaction to be inserted in a block. This is particularly important because it reduces the cost of running a full node effectively helping Bitcoin to remain decentralized.

All this with the added benefit of instant transaction confirmation!

Yeah, sure, but what about the super-nodes I’m seeing in that picture?

The key thing about Lightning is that in the end what users are left with are valid Bitcoin transactions. This means that all the Bitcoin assumptions are being kept.

As long as the underlying layer is permissionless, trustless and secure the same applies for the transactions a user is left with after voluntarily using Lightning.

Lightning won’t ever change the rules of the underlying Bitcoin network.

Furthermore, Lightning uses onion routing which makes it impossible for intermediary nodes to know the source and destination of the transactions. This makes it impossible for these nodes to selectively censor transactions.

So in what ways can highly connected Lightning nodes misbehave?

Well, they can:

Create some disruption if they suddenly leave the network. Charge higher routing fees.

But wait, how likely is that?

What is the cost of just routing around censorship or network disruption?

What is the cost of routing around high fees?

I argue that the cost is negligible.

The cost of opening new channels is just the cost of a regular Bitcoin transaction. You can even run a LN node in a raspberry pi. That’s one of the advantages of keeping the blockchain as small and uncluttered as possible.

If someone misbehaves the network will adapt and route around it easily. The barriers to entry are so small that competition will be high. The super-node of today will quickly become insignificant if he tries to disrupt the network.

So what if some node just keeps being a highly connected node collecting his routing fees and providing liquidity to the network? Is that bad in any way? Why? What are the other bad consequences of having a super-node? I’m not seeing it.

Don’t get me wrong, some level of decentralization is quite desirable to make the network more robust, but the level of concern some people are showing is highly exaggerated.

This is even more telling when the people who worry so much about LN centralization end up promoting some token with worse base layer centralization and advocate that people should stop running full nodes.

Lightning Network is not taking anything from the permissionless nature of the Bitcoin network. If anything it is an excellent incentive for people to run their own Bitcoin full-nodes.

So consider running your LN node and start building cool stuff on it!