The Lightning Network Will Corrupt Bitcoin – FutureSin – Medium

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Photo by Sean McAuliffe on Unsplash

Here’s why

While the pressure for Ethereum and Bitcoin to reach scalability and mass adoption is intense, not all is fair and well.

The growth of the Lightning Network has been remarkable. But there’s a catch.

What Pompliano, Klaus Lovgreen, John Carvalho, Marty Bent, Andreas Antonopoulos, Elizabeth Stark of Lightning Labs and even Jack Dorsey don’t tell you, is pretty serious.

Bitcoin won’t be Decentralized with the Lightning Network

The danger is obvious, the Lightning Network will effectively transforming the largest cryptocurrency in the world into an internationally centralized payment network like Visa and Mastercard.

A few whales will profit and the likes of Square Cash, Microsoft, Bakkt and Fidelity will thrive with Bitcoin’s new popularity, but it won’t be the Bitcoin we once knew.

The cult of Bitcoin and the art of HODLing, really favors a few and that’s centralized. It doesn’t matter if some aspects of Bitcoin are decentralized if ownership of the scarce digital assets are centralized.

It’s no coincidence Bitcoin via the Lightning Network will benefit primarily people in the Silicon Valley, while ignoring the hardworking miners, and node operators, among others. Silicon Valley enjoys doing this over and over.

When China thinks Bitcoin is wasteful and people think the Lightning Network is Bitcoin’s future, it’s good for the price of Bitcoin, but not good for the future of Bitcoin as decentralized.

The Lightning Network is Deeply Flawed

The Lightning Network is not a “Scaling Solution”, it’s more like a system for a few to profiteer on its popularity and staying power.

With the Lightning Network, anyone who is connected to the Lightning Network can pay anyone else who is also connected to the Lightning Network, but that sidesteps the decentralized nation of Bitcoin itself. While the solution makes a business case for mass adoption, the price is very steep: a decentralized future for cryptocurrencies.

It’s a bit like Facebook’s stablecoin project Libra program creating a payment system for Indians on WhatsApp, but tethered to fiat, it’s a crypto clone without the decentralized aspect of being a real cryptocurrency.

The addition of the second-layer protocol payments systems is a hype train that offers convenience while sacrificing the true nation of blockchain.

The Lightning Network Reincarnates Bitcoin in a Centralized System

Visa and Mastercard are ironically, the two original corporations that Satoshi Nakamoto wanted to eradicate when he created Bitcoin. However the Lightning Network so far as I can tell simply clones those sorts of systems with Bitcoin as the digital currency of choice. Tell me if I’m wrong?

Bitcoin is perceived to be a modern day equivalent to gold as consumers holding it prefer to profit from its price increase rather than spend it on products and goods that could be purchased via fiat currencies.

Facebook trying to clone a stablecoin for its internal walled garden that monetizes itself through advertising is very much like Silicon Valley tech people trying to create a Lightning Network to utilize Bitcoin accord to their claims on its future.

Lightning may represent the ‘next level’ of payments using Bitcoin, but it also likely will lead to its eventual demise. This is because it scales it without maintaining its original spirit.

It’s a bit like listening to Joseph Lubin talk about what Ethereum will become. The Lightning Network builds a payment channel based on cryptographic algorithms, enables on-chain resources only to be consumed when the channel is established or closed. That’s not really compatible with the open and decentralized nature of Bitcoin itself.

The Lightning Network creates a system that effectively kills Bitcoin. That is, if the Lightning Network scales “Bitcoin is as good as dead,” and such a Lightning Network will fundamental lead to its demise, where just a few people and businesses can maximize their short-term profits.

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