Does the Lightning Network Threaten Bitcoin’s Censorship Resistance?

The Lightning Network may well be Bitcoin’s main solution to the problem of scalability, however many skeptics believe there are unsettled problems with this layer-2 system for the blockchain. The possibility of excessive centralization through so-called “supernodes” is among the typical criticisms of the Lightning Network, and connected to that is the fear of these new, primarily -centralized payment hubs having the capability to censor transactions.Bitcoin Publication recently connected to BitGo Engineer and creator Jameson Lopp to obtain his thoughts on the possible personal privacy concerns related to the Lightning Network.Lightning Network May Offer Better Personal privacy Although a loss of personal privacy is sometimes mentioned as a possible, negative element of the Lightning Network, the truth is that it might offer better privacy than the current base layer of the Bitcoin blockchain. This is mainly due to the reality that the blockchain is an open, mainly -transparent ledger that can be seen by anybody by means of a block explorer.Lopp made this point throughout an interview with Bitcoin Publication:”I expect that privacy will in fact be much better on the Lightning Network than on-chain since deals are not transmitted to the entire network. It will

be much more difficult to collect analytics on the Lightning Network because routing nodes just know the hop prior to and the hop after when routing, not the whole route.”Although not ideal, the Lightning Network does provide the advantage of keeping info relevant to particular deals away from an

open, transparent ledger. Whether the Lightning Network can offer much better privacy than a standard checking account( where only the bank and the parties involved in a deal find out about it)is an unidentified at this point.Will Nodes Be Compelled to Comply with AML and KYC Laws?One of the primary concerns connected with a Lightning Network that has a couple of entities running almost

all the nodes is that these nodes will be compelled to comply with Anti Cash Laundering (AML )and Know Your Client(KYC)policies. To this point, Lopp responded,”I understand the AML/KYC fear, but routing nodes are non-custodial.”Lopp went on to describe that BitGo has based its business around being non-custodial due to the fact that it means it doesn’t have to deal with all the regulative concerns related to holding user funds.The BitGo engineer also kept in mind that the Lightning Network might still operate in an environment where the laws are changed to fit that regulation-avoiding design. Lopp thinks that, much like the Web, users could merely go around nodes with burdensome requirements for routing payments. He added,”Because [circumstance], we’ll still see a lot of non-compliant nodes.”A Nonstop Battle of Personal privacy vs. Security It’s possible that the battle in between privacy and security will never end. Having said that, those trying to break privacy on the Internet are usually reacting to brand-new technologies produced by privacy-minded individuals and organizations.At this point,

it appears that an attack on the level of personal privacy offered

by the Lightning Network would resemble an attack on the Tor network. Lopp informed Bitcoin Magazine,”I imagine that they would need to be a well-funded opponent in order to be able to view a considerable portion of traffic.”Blockstream’s Rusty Russell and Lightning’s Olaoluwa Osuntokun have actually been working on bringing onion routing to the Lightning Network, and it’s clear that privacy is given the utmost respect by the designers dealing with this project. “I predict a Tor-style arms race in the future on 2 fronts,”Russell told Bitcoin Publication.”One will be the battle versus analytics(such as

timing attacks )and bugs. The other will protest centralization, which as Bitcoin is learning, is a difficult problem that, which is mainly met by( 1)making it easy to decentralize, and(2 )ensuring people know the risk.

“There are always tradeoffs between personal privacy and use. Zcash appears to be the most privacy-conscious blockchain today, but there are a few problems with the system when it concerns performance. Open Transactions could also be utilized to carry out truly confidential digital money, but the federated server design because system is not as protected as a blockchain (or even the Lightning Network )when it comes to manage over one’s funds.The post Does the Lightning Network Threaten Bitcoin’s Censorship Resistance? appeared first on Bitcoin Publication. Bitcoin Publication

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