Rain and sunshine in the Lightning Network

The Lightning adoption is progressing. Since a few days the company Blockstream publishes daily a new application, which uses the Lightning Network. But the Second Layer Network still suffers from teething troubles.

The Lightning Network, the off-chain solution to Bitcoin’s scaling problem, is on everyone’s lips. It should not only solve the classic problem of transaction fees in a sustainable way, but also enable a fast exchange into other crypto currencies via Atomic swaps.

Lightning-Adoption progresses, first applications are the Bitcoin formula

A few days ago BTC-ECHO reported that the Lightning Network has now arrived in the Main Net. The number of Lightning Nodes has now reached almost 1,500, the Bitcoin formula adoption is progressing faster than the Bitcoin formula Cash acceptance.

This positive news is currently culminating in the neologism of LApps. LApps are Lightning Apps, i.e. applications that would not run without the Lightning Network. Blockstream has been publishing a new LApp every day for almost a week now.

These primarily have micro-payment solutions in mind and want to offer payment solutions based on Bitcoin, especially in the content sector. One feels reminded of SatoshiPay: via FileBazaar, micro-payments should be possible for users who offer photos, videos or documents. Lightning Publisher for WordPress is a distinctive name: bloggers can use it to place individual posts behind a paywall. With Nanotip you can pay other Litecoin users small amounts as recognition – Reddit users quickly feel reminded of tipbots. Finally, PayPerCall is intended to extend the concept of microtransactions to various API calls.

Loss of money through the Bitcoin trader

So far, the Bitcoin trader experience of the Lightning Network coincides with what you see when you look out of the window. The spring fever, however, is clouded by an unpleasant news: Is Bitcoin Trader a Scam? Read This Review Before You Sign Up! One user stated that his Bitcoin transaction was lost via the Lightning Network.

A user with a faulty channel database (i.e. a database containing the available payment channels for the network) did what anyone would have done: restored an old backup.

But now the problem was that this backup was obsolete. So the Lightning Node of the unfortunate sent the wrong status of the payment channels. Other nodes recognized this error, interpreted it as an attack attempt and acted accordingly.

Strictly speaking, the Lightning Network worked as it should: it detected that the database had stored incorrect information regarding account balances. This would be tantamount to a double-spending attempt.

Such a strict procedure is important: via the Lightning Network, the sender only announces in the first step that he wants to send a certain amount x to the recipient – an actual transaction takes place later. Such announcements wouldn’t be worth much more than promises if they weren’t controlled and synchronized decentrally.

And it is precisely this control that the poor user has fallen victim to. By the way, the user does not have to complain about a big loss: He only wanted to send the equivalent of 20 Euros.

Errors in the application layer, not in the Lightning Network
The error was therefore less one of the lighting network itself than of the application level. The Lightning Client should not allow transactions based on an old channel database in the first place, so that such errors cannot happen.

You can see from the incident that the Lightning Network certainly still has to do its homework. For the individual Bitcoin user, this means that he should be careful with Lightning transactions for the time being and not send excessive amounts of money. However, this should be possible with a network that supports microtransactions.