The Lightning Network may good hold upwards Bitcoin’s primary solution to the lawsuit of scalability, but many skeptics believe in that place are unresolved issues alongside this layer-2 system for the blockchain. The possibility of equally good much centralization via so-called “supernodes” is i of the mutual criticisms of the Lightning Network, together with attached to that is the fearfulness of these new, by together with large -centralized payment hubs having the capacity to censor transactions.
Bitcoin Magazine late reached out to BitGo Engineer together with Statoshi.info creator Jameson Lopp to acquire his thoughts on the possible privacy issues associated alongside the Lightning Network.
Lightning Network May Offer Better Privacy
Although a loss of privacy is sometimes mentioned equally a possible, negative facial expression of the Lightning Network, the reality is that it may offering amend privacy than the electrical flow base of operations layer of the Bitcoin blockchain. This is mainly due to the fact that the blockchain is an open, by together with large -transparent ledger that tin hold upwards viewed yesteryear anyone via a block explorer.
Lopp made this quest during an interview alongside Bitcoin Magazine:
“I await that privacy volition real hold upwards amend on the Lightning Network than on-chain because transactions are non broadcast to the entire network. It volition hold upwards much harder to collect analytics on the Lightning Network because routing nodes exclusively know the hop earlier together with the hop later on when routing, non the entire route.”
Although non perfect, the Lightning Network does offering the wages of keeping data related to specific transactions away from an open, transparent ledger. Whether the Lightning Network tin offering amend privacy than a traditional banking concern trace of piece of work organisation human relationship (where exclusively the banking concern together with the parties involved inward a transaction know almost it) is an unknown at this point.
Will Nodes Be Forced to Comply alongside AML together with KYC Laws?
One of the principal concerns associated alongside a Lightning Network that has a few entities running nearly all of the nodes is that these nodes volition hold upwards forced to comply alongside Anti Money Laundering (AML) together with Know Your Customer (KYC) regulations. To this point, Lopp responded, “I empathise the AML/KYC fear, but routing nodes are non-custodial.”
Lopp went on to explicate that BitGo has based its trace of piece of work organisation approximately existence non-custodial because it agency it doesn’t select to bargain alongside all of the regulatory issues associated alongside belongings user funds.
The BitGo engineer also noted that the Lightning Network could even together with thus operate inward an environs where the laws are changed to jibe that regulation-avoiding model. Lopp believes that, much similar the Internet, users could only acquire approximately nodes alongside onerous requirements for routing payments. He added, “In that [scenario], we'll even together with thus run across enough of non-compliant nodes.”
A Never-Ending Battle of Privacy vs. Surveillance
It’s possible that the battle betwixt privacy together with surveillance volition never end. Having said that, those attempting to suspension privacy on the Internet are unremarkably responding to novel technologies created yesteryear privacy-minded individuals together with organizations.
At this point, it appears that an assault on the degree of privacy offered yesteryear the Lightning Network would hold upwards similar to an assault on the Tor network. Lopp told Bitcoin Magazine, “I imagine that they would take away to hold upwards a well-funded assaulter inward gild to hold upwards able to lookout adult man a meaning part of traffic.”
Blockstream’s Rusty Russell together with Lightning’s Olaoluwa Osuntokun have been working on bringing onion routing to the Lightning Network, together with it’s clear that privacy is given the utmost abide by yesteryear the developers working on this project.
“I foresee a Tor-style arms race inward the hereafter on 2 fronts,” Russell told Bitcoin Magazine. “One volition hold upwards the battle against analytics (such equally timing attacks) together with bugs. The other volition hold upwards against centralization, which equally Bitcoin is learning, is a difficult occupation that, which is mainly met yesteryear (1) making it tardily to decentralize, together with (2) making certain people are aware of the danger.”
There are ever tradeoffs betwixt privacy together with usability. Zcash appears to hold upwards the most privacy-conscious blockchain today, but in that place are a few issues alongside the scheme when it comes to efficiency. Open Transactions could also hold upwards used to implement real anonymous digital cash, but the federated server model inward that scheme is non equally secure equally a blockchain (or fifty-fifty the Lightning Network) when it comes to command over one’s funds.
The postal service Does the Lightning Network Threaten Bitcoin’s Censorship Resistance? appeared kickoff on Bitcoin Magazine.
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