One of the most popular Bitcoin projects that haven’t attained completed fruition in terms of development and implementation is its Lightning Network. Launched back in 2018 in order to improve the scalability issue of Bitcoin transactions, the LN has often been criticized with regard to its functionality and structural security.
Although, originally the design of the LN was supposed to be decentralized, according to research, the system is now evolving towards an increasingly centralized architecture.
A recent study released by IOP Institute of Physics indicated that that Bitcoin distribution is very unequal on the network.
The LN had many star-like sub-structure, that had coinciding centers as revealed by the Gini coefficient. Now, these hubs acted like channel-switching nodes, which is an unavoidable consequence of how the network is constructed. The study said,
“At the same time, nodes (which can only create channels based on local information) have the incentive to become as central as possible within the BLN, in order to maximize the transaction fees they earn.”
The average Gini coefficient of the node strengths (computed across the entire history of the Bitcoin Lightning Network) is 0.88 causing the 10% (50%) of the nodes to hold the 80% (99%) of the bitcoins at stake in the Bitcoin LN (on average, across the entire period). Hence, these results indicated that the BLN network architecture was becoming increasingly “less distributed”, which was inevitably making BLN extremely fragile towards attacks and failures.
Bitcoin can be stolen from Lightning Network
The rising issue of centralization aside, a couple of researchers from Israel’s Hebrew University also found out that a bottleneck existed in the LN system to drain wallets of funds.
tldr: attack many victims at once and steal money from channels in the ensuing chaos
Medium post: https://t.co/wA4dVhi7fN
Full Paper: https://t.co/U1Cmd8E2ac
— Aviv Zohar (@Avivz78) June 28, 2020
John Harris and Aviv Zohar, detailed that the attack takes place through the intermediary nodes. These intermediary nodes may try to steal the Bitcoin but within a small time window. The researcher explained,
“The attacker forces many victims at once to flood the blockchain with claims for their funds. He is then able to leverage the congestion that they create to steal any funds that were not claimed before the deadline.”
The researchers revealed that they have shared their work with developers of the Lightning Network, in order to develop a defense against such attacks.