The development of the Bitcoin Lightning network has had one main objective over the last few years: to offer an alternative network to transfer BTC quickly, securely and with low costs. However, for years its adoption has been timid among wallet and exchange providers. Bitcoin's two major crashes in 2023, which represented increases in mainnet fees, highlighted the need for a solution that would allow for cheaper exchanges. But even so, adoption of Lightning by the common user did not materialize, so opinions arose about the possibility that this technology was broken in some way.
Reality can be harsh for those of us who understand that Lightning has great potential. If we look at the figures on the use of this network in the last month, after two weeks of congestion, we will observe a decrease in liquidity of almost 5% (at least 230 BTC less capacity) and the number of channels by almost 2% (1,180 channels), according to data from Amboss Space. In fact, the main monitors of the Lightning network did not express increases in usage during either congestion
A question then arises. Why don't people or businesses use the Lightning network during congestion like the ones we have experienced with the Ordinals boom, if it is cheaper and faster than using the main network?
Among those who think that Lightning failed, there is talk of the difficulty in understanding how it works. Certainly, there seems to be a barrier to entry that is related to the difficulty of opening payment channels. If someone would like to open a channel with another person, there are certain steps they must follow. For example, it is necessary to manage network nodes and inject funds into the channel through a network transaction.
This means that people must know the software that allows opening or closing channels (which have become easy to operate over time, but are not widely known). Additionally, users are faced with different choices that can mislead them. Whoever wants to make a payment needs their counterparty to be connected to the network. Otherwise, you have to use another mechanism, where you would have to transfer the trust of that operation to a third participant who injects liquidity into a mediation channel.
In fact, the main Lightning network services are custodial and perform this task for users, in exchange for a small commission. The most common procedure used by these services is payment routing. A company, which manages one or several nodes, offers a way to connect someone who sends BTC with someone who receives them through a channel funded by them but other considerations arise here. If a person decides to use one of these services, they must trust the company that offers it. The transaction becomes less private, and the operator could know the origin and destination of the funds involved. In any case, most of these services are reliable, thefts in Lightning, for example, although possible through complex procedures, do not usually occur.
A funded channel solves several problems. For example, the need for counterparties to be connected simultaneously or to individually finance a channel. However, it does not eliminate the problem of network fees.
Network congestion and increased fees reveal a problem that is difficult for Lightning to solve, due to its design. Funding a channel or closing it to use funds outside of the Lightning Network requires a network transaction. If commissions are high due to congestion, a user who creates a channel does not escape the original problem that he wants to avoid. If you use a service that generates the channel for you, the company would have to make that commission payment. This means that, if the commissions are very high, the service will probably be suspended for the duration of this situation, because it would not be able to cover the cost of most of the transactions, which are usually small amounts.
Those who argue that the rise of Ordinals drives the use of Lightning and that this is positive for Bitcoin are wrong. Precisely because we already saw how in the past several services had to paralyze their activity while network commissions were high. When competition for block space increases like in May, even a large exchange like Binance may find it necessary to suspend BTC withdrawals , because the cost of network fees becomes a waste of money.
There is a way to take advantage of Lightning during congestion, but there is certainly not a culture around it that allows people to use this possibility. It's about creating channels preventively. Having channels made would help many people get around congestion, but it doesn't solve the problem of having to make a pop-up payment to a new address, if it needs to be done during network congestion.
There is a way to take advantage of Lightning during congestion, but there is certainly not a culture around it that allows people to use this possibility. It's about creating channels preventively. Having channels made would help many people get around congestion, but it doesn't solve the problem of having to make a pop-up payment to a new address, if it needs to be done during network congestion.
In other words, the Lightning network is not designed for congestion, even though its primary goal is to scale Bitcoin. Perhaps we should consider that Lightning emerged to address Bitcoin problems of the past and do not correspond to current problems.Or perhaps the possibility that fees are the result of congestion states that could result from mass adoption was not well considered. Additionally, there is a chance that fees will remain high going forward, if token markets in Bitcoin consolidate. So it seems like it's a pressing problem for Lightning to help in those cases.
Wrapping Up
Lightning does not solve all of Bitcoin's scalability problems if you look through this sieve. And it is surely necessary to constantly improve every aspect of its code if we aspire to make it one of the mainnet scalability solutions in the future (probably not the only one).
If people are not using Lightning, it is not only due to lack of knowledge, difficulty of use or low liquidity, but also because its developers are not addressing Bitcoin's current problems. One of these is congestion. It may be difficult, but it seems necessary to find a mechanism to alleviate the burden that high fees generate when creating, refinancing or closing a payment channel in Lightning, even if those moments are exceptional. Something tells me that there are already people trying to solve that problem.
However, from my point of view, a kind of self-absorption has persisted in developing a mechanism to make payment channels more flexible and to alleviate risk or security points, when the very idea of the payment channel carries many limitations for mass use, an aspect that perhaps requires greater attention. Lightning seems to solve very well the problems of people who want extreme privacy or take charge of all their BTC exchanges without depending on anyone; but when it comes to ease of use, for now, it falters.
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