LayerTwo Labs: Bitcoin still has scaling issues

Author: LayerTwo Labs co-founder Austin Alexander, Blockworks; Compiler: Deng Tong, Golden Finance

In the beginning, Lightning Network Seems like a panacea to Bitcoin’s scalability issues.

The initial promises were enticing—faster transactions, lower fees, and the ability to handle more transactions per second.

ButAs Lightning Network adoption gained momentum, it was discovered that despite its scalability advantages, it also had serious flaws.

As the market grew more excited about the idea of ​​a flashy and well-marketed scaling solution for Bitcoin, so did its adoption. Thanks to Lightning Network’s solutions, we can expect to witness an increasing number of users and merchants accepting Bitcoin for everyday use.

However,issues such as liquidity constraints, channel management complexity, security and the need for constant monitoring present significant obstacles to achieving the network’s promised scalability.

Recently, there has been a heated debate surrounding centralization issues related to the Lightning Network. Although I and other enthusiasts have been discussing these issues for some time, they are just beginning to receive mainstream attention.

Critics argue that such a network built on Bitcoin inherently risks compromising the decentralized nature of Bitcoin transactions. It raises important questions about the balance between efficiency and decentralization, challenging the core principles underpinning the cryptocurrency movement.

Since the Lightning Network relies on routing to scale, once it starts growing, optimization is critical to ensuring transaction reliability and a seamless experience for users, but the results are mediocre. The challenge is always to find the optimal balance between technical complexity and user-friendly interface.

Security is a top priority for all Bitcoin infrastructure and requires particularly careful consideration. As adoption of the Bitcoin Lightning Network increases, so do potential security vulnerabilities and attack vectors.

Lightning Network nodes must be continuously online to facilitate payment transactions. Since users are required to log in using private keys, there is an extremely high risk that their funds could be stolen if they conduct transactions on a compromised node.

Antoine Riard, one of the Lightning Network’s own developers, recently revealed another core security flaw called a substitution loop attack that affects hash timelock contracts. This type of attack can severely disrupt the normal transaction process, resulting in severe financial losses on the network.

Networks also face additional threats such as congestion caused by malicious attacks. If a payment channel becomes congested and falls victim to a malicious hacker or attack, participants may experience delays in retrieving their funds in a timely manner due to existing congestion issues.

Exploring these vulnerabilities, understanding their impact, and implementing strong mitigation strategies are critical to protecting the integrity of any scaling solution, especially one built directly on the world’s largest and most decentralized blockchain solution above. Ongoing efforts to enhance security and address emerging threats underscore the Bitcoin community’s commitment to hardening the network against potential risks.

Going forward, if we as a community truly want to get the most out of the Bitcoin network while retaining its core principles, then we need to accept that the Lightning Network is only a small part of Bitcoin’s solution to the scaling problem. The evolution of Bitcoin scalability is not a one-size-fits-all journey.

In my opinion, success requires a balance between technical complexity and general usability - a delicate endeavor that requires constant refinement.

Continuous development and improvements, combined with a deep commitment from some of the community's most dedicated developers to genuinely work on solving challenges, paint a promising picture for the future of the web.