Lightning Network Found Not to be as Scalable and Safe as Expected

Recent research conducted by the BitMEX cryptocurrency exchange has suggested that privacy and scalability of Bitcoin’s (BTC) Lightning Network is not quite as expected.

On January 11 BitMEX released a report, which focuses on the network’s growth assessed on the basis of data obtained from public channels.

The team investigated non-cooperative channel closures and found that the amount of such transactions is estimated in more than 60,000.

Non-cooperative channel closure occurs when a Bitcoin Lightning Network node closes a payment channel without direct communication with the node the channel is linked to.

Non-cooperative channel closures more frequent than expected

It takes less time and effort to recognize non-cooperative channel closures, and they have to be confirmed in the blocks of blockchain. With this in mind, the researchers concluded the following from higher-than-expected amount of these transactions:

“The fact that non-cooperative closures are more common than many thought, means the privacy and scalability benefits of lightning are lower than many expected too. However, […] as users learn more about how to use the lightning network and lightning wallets improve, the prevalence of non-cooperative closures could fall.”

The report also stated that BitMEX’s team anticipated 30,000 transactions, but found 60,000 instead. Direct search returned even higher number — 90,667 with total 1,405 BTC spent.

Lightning attacks are not frequent

The report also suggests that one of the possible scenarios after the non-cooperative closure is a breach closure (when the closing party broadcasts an old state in order to steal funds). This may be followed by a penalty transaction if theft is detected, and other party claims all the funds. According to the report, such attempts are not frequent:

“Our analysis shows that these penalty transactions are very rare. Only 0.30% of non-cooperative closures result in a penalty transaction or 0.22% by value.”

Though Lightning Network is promising, it is still experimental. A Redditor who lost 4 Bitcoin on the Lightning Network later published advice based on his experience. He suggested users to understand how the network really works if they want to use it.

Still, many people in the cryptocurrency community remain enthusiastic about Lightning’s almost fee-less instant transactions. In November 2019 Nik Bhatia, a bond market veteran, said that with Lightning, Bitcoin has become an unmatched asset combining a store of value and medium-of-exchange scale and speed.