Throughout the traditionally important block dimension debate that raged via the Bitcoin userbase from 2015 to 2017, a key space of competition surrounded the thought of how bitcoin (BTC)-denominated funds will scale to a world userbase.
Whereas some main miners, exchanges, pockets suppliers, and different customers needed to see a exhausting fork to extend capability for on-chain funds, the main contributors to Bitcoin Core and different customers thought it might be a greater concept to attempt to maximize use of the then-available block house restrict earlier than choosing a backwards incompatible change that would doubtlessly break up the community.
The tip results of this debate was the adoption of Segregated Witness (SegWit), which paved the way in which for the Lightning Community to develop as a secondary funds layer for the bottom Bitcoin blockchain.
Whereas there was some adoption of this layer-two (L2) Bitcoin community in numerous kinds, drivechain inventor and LayerTwo Labs CEO Paul Sztorc just lately referred to Lightning as a “giant failure,” which sparked some debate on X.
This isn’t essentially a brand new place from Sztorc, as he’s written fairly extensively about Lightning’s shortcomings and makes an attempt to blackpill Lightning fanatics at any alternative.
So, is there benefit to Sztorc’s claims concerning the Lightning Community? Let’s take a better take a look at a current debate Sztorc had with the Human Rights Basis’s Alex Gladstein on What Bitcoin Did, along with some further, clarifying feedback Sztorc shared with Protos.
Apply vs. principle
A lot of the disagreement between Sztorc and Gladstein concerning the success or failure of Lightning Community has to do with how the BTC-denominated funds protocol works in observe immediately compared to the way it theoretically might not work so nicely over the long run.
On the one hand, Gladstein pointed to quite a few examples of how the community is offering worth to customers immediately, corresponding to Nostr Zaps, adoption by massive exchanges like Binance and Coinbase, and the upcoming integration for Sq. retailers.
Moreover, a lot of Gladstein’s work with the Human Rights Basis happens in areas the place the shortage of know your buyer and anti-money laundering restrictions on Bitcoin have been a boon to adoption for many who want it most.
Moreover, Gladstein says there have been huge enhancements made to the Lightning Community’s usability prior to now 5 – 6 years.
“From our perspective, what you’re saying couldn’t be further from our experience,” he instructed Sztorc throughout their current debate.
In distinction, Sztorc sees these examples of real-world use as largely irrelevant to his underlying level of the system not being scalable or workable over the long run.
Notably, he explicitly pointed to the elevated charges attributable to the Ordinals Inscriptions phenomenon for instance of how the Lightning Community can begin to buckle below strain.
To Sztorc’s level, the Lightning Community does have a problem the place reverting to the Bitcoin blockchain or opening a low steadiness self-custodial Lightning channel within the first place can turn out to be uneconomical in high-fee environments.
Sztorc prefers his personal answer, often called drivechain, over the Lightning Community. A drivechain is a sort of Bitcoin sidechain the place the BTC is successfully managed by the miners.
To be clear, Gladstein said that drivechains are an attention-grabbing concept; nonetheless, he additionally identified that the truth that they’re strictly theoretical at this level as a consequence of their lack of existence on Bitcoin’s mainnet.
Sztorc has revealed a number of Bitcoin Enchancment Proposals (BIPs), notably BIP 300 and BIP 301, concerning the drivechain idea, however there hasn’t been a lot traction when it comes to activating the mandatory delicate fork for the change, whether or not that be via Bitcoin Core or an various delicate fork activation consumer.
Drivechain critics, corresponding to Bitcoin Core contributor and OpenTimestamps founder Peter Todd, say Sztorc’s concept can negatively have an effect on Bitcoin on the base layer, regardless of the supposed objective of drivechain to behave as an answer for secondary protocol layers.
Sztorc has revealed responses to frequent criticisms of his invention in FAQ format.
“I don’t think it’s guaranteed to work, but I do think, relative to the [interest or hype] Lightning gets, it is totally mismatched,” Sztorc mentioned in the course of the debate.
He additionally analogized drivechains to “teleporting to the finish line” of Bitcoin’s eventual scaling roadmap.
Why doesn’t the Lightning Community work?
Once more, to be clear, Sztorc admits that the Lightning Community can work immediately on a small scale. It’s over the long term in a larger-scale state of affairs the place he sees extra severe points.
He even defined how he was initially very within the Lightning Community when it was first revealed — he even constructed a design for SPV fraud proofs that use the Lightning Community.
Nevertheless, he’s turn out to be rather more disillusioned over time.
Sztorc summarized the technical points with the Lightning Community at one level in the course of the debate as follows:
There aren’t sufficient bytes on Bitcoin’s layer one to onboard everybody
There’s counterparty danger as a result of Lightning channels can lock a consumer’s funds for 2 weeks and even steal funds below sure situations
The inbound liquidity drawback is counterintuitive and creates an costly, horrible consumer expertise
Excessive on-chain charges trigger points for onboarding and Lightning’s safety ensures, as was seen when the Ordinals phenomenon prompted excessive charges on a number of events
A lot of the adoption Lightning has achieved is by way of custodial techniques, which has tricked individuals into considering Lightning is healthier than it truly is
Adoption continues to be low regardless of the custodial Lightning shortcut
Privateness is horrible
In one other part of the talk, Sztorc additionally briefly touched on the fact that BTC miners are those who resolve which legitimate transactions get included in blocks.
As such, they could have a bit of additional energy when it comes to influencing customers to want a mannequin the place they receives a commission for all transactions on secondary networks, corresponding to drivechain, over one thing just like the Lightning Community.
“They will have the issue that either the large miners will want to vertically integrate, or they’ll have some sort of tug-of-war conflict over who can get that money, at which point a lot of the security model will go away,” Sztorc defined.
Whereas there’s loads of work being accomplished by researchers and builders to resolve lots of the points cited by Sztorc, his final critique is that the Lightning Community was bought because the be-all and end-all for all of Bitcoin’s issues.
He went so far as to check claims that Lightning’s present technical challenges had been all the time recognized and the system was by no means supposed for use by all finish customers to the mantra of “We have always been at war with Eastasia” from the novel 1984.
Consistent with Sztorc’s critique, a rising variety of individuals now view the Lightning Community much less as an answer for on a regular basis finish customers and extra because the connective infrastructure between various secondary layers within the Bitcoin ecosystem.
“That’s a mistake I made,” admitted Gladstein in the course of the debate. “I assumed that was the case, after which I modified my thoughts primarily based on proof.
“I think now that Lightning is going to be this central nervous system-type network that exists between what the end users use, and the on-chain [users], and businesses, and exchanges, and everything. They’re all going to speak to each other through this open monetary network that’s Lightning.”
In fact, this brings up one other space of competition for Sztorc, as he doesn’t see the custodial or federated techniques which are dwell on Bitcoin immediately as acceptable secondary layers that retain the basic properties that make BTC beneficial within the first place.
And to be truthful, many different Bitcoin customers, who are likely to view self-custody as a paramount property of the system, agree with Sztorc right here.
“The federated model is just about the worst thing to happen in Bitcoin’s history, I think,” mentioned Sztorc in the course of the debate.
“So, it’s interesting that you’re so blasé about what it means. The federated model basically means: I’ll give you all of my coins immediately, and I have no recourse about ever getting them back.”
Sztorc identified that there are options to the federated mannequin that supply higher financial ensures for finish customers, together with his drivechain idea.
Once more, Gladstein is open to higher fashions, but additionally appears enthusiastic about know-how that takes benefit of how Bitcoin works immediately, corresponding to Chaumian ecash protocols like Cashu enabling a a lot increased diploma of consumer privateness.
There’s a clear disagreement on this level, with Gladstein seeing the techniques which are already attainable as helpful and underrated, whereas Sztorc doesn’t see the purpose of spending time on such centralized choices.
With out opening a technical can of worms that’s out of the scope of this text, it also needs to be famous that miners can nonetheless technically steal consumer funds from a drivechain; nonetheless, Sztorc argues that financial incentives stop them from doing so.
In fact, there’s no cause drivechain can’t be mixed with the Lightning Community. On this state of affairs, Lightning continues to be used because the connective tissue between completely different layer-two networks, of which a number of drivechains are an possibility.
When requested about this level particularly by Protos, Sztorc said, ”It’s attainable to make use of Lightning on every drivechain, and in the event that they every assist a standard hash algo (ie sha256 — that is mainly 100% assured) then in truth they’re all interoperable.
“If someone along the route has a channel on two or more networks, then they automatically bridge the gap.”
Sztorc added that he beforehand believed a drivechain might be helpful for testing out new Bitcoin options which are related to the Lightning Community, corresponding to SIGHASH_ANYPREVOUT, earlier than they make it to Bitcoin’s mainnet, successfully providing early entry to new Lightning options.
Close to the tip of their debate on What Bitcoin Did, Gladstein pleaded with Sztorc to be extra open to working with different tasks, however his conviction in drivechain clearly leads him to usually view different tasks attempting to resolve related points as wastes of time.
“Why can’t we take the middle ground and just say [Lightning] is emerging, it’s not perfect by any stretch, [and] it has bugs,” mentioned Gladstein. “But it’s getting better all the time.”
“I think we sorta did end up agreeing, at the end,” Sztorc later instructed Protos. “I finally wore them down! A little.”
