Current Lightning Network Routing Is Not Economically Viable
Many BTC supporters have long believed that the Lightning Network (LN) will be a solution to the Bitcoin blockchain’s scaling problems. Since then the LN protocol has yet to live up to the promises and the network has been plagued with issues. For instance, during the last week of October, one user lost 4 BTC after force-closing an LN channel using an older invalid state. In June, a bug was discovered by developers that allowed LN-based BTC to be spent that was not officially backed by legitimate BTC reserves. LN has been heralded by crypto proponents even though it has been heavily criticized for UX unfriendliness, centralization, and routing issues. Now another study details that the LN project is “economically irrational” while the network also has problems with privacy. The paper’s authors Ferenc Beres, Istvan Seres, and Andras Benczur work at the Institute for Computer Science and Control (SZTAKI) in Hungary alongside Eötvös Loránd and Szechenyi University.

The researchers used a simulator that relies only on publicly available data of the LN framework such as capacity and network structure. The simulation also “generates transactions under assumptions” that the researchers attempted to validate based on information stemming from “LN node owners.” The findings estimate that data deriving from transaction fees shows the LN infrastructure is “economically irrational.”

“Either traffic or transaction fees must increase by orders of magnitude to make payment routing economically viable,” the Hungarian researchers’ paper notes. “We give worst-case estimates for the potential fee increase by assuming strong price competition among the routers. We also estimate how current channel structures and pricing policies respond to a potential increase in traffic and show examples of nodes who are estimated to operate with economically feasible revenue.”

Sourced through Scoop.it from: news.bitcoin.com