<p>The "centralization" that most people talk about is really about limiting who can effectively (and profitably) participate. </p>

<p>If we're talking about the blocksize debate, the idea is that larger block sizes require faster internet connections to remain competitive and at a certain point this might make it infeasible for any but a few large companies to be profitable mining blocks. If this is true, because bitcoin is essentially controlled by miners, this could lead to a different group of people controlling bitcoin than do now (ie perhaps a group we don't want controlling bitcoin).</p>

<p>If we're talking about the lightning network, the idea is that larger hubs would have the advantage over smaller hubs because they'd be more likely to have a route to whoever you want to pay and those routes are likely to have fewer hops. The thing is, if this is true it doesn't really affect Bitcoin. Even if the result is that everyone is connected to one single hub, that hub has 0 power to influence miners. If that megahub ends up being a bad actor, someone can easily switch to another hub. There might be some privacy issues with a megahub, and they could censor transactions, and that kind of thing, but it wouldn't be able to steal your bitcoins nor would it be able to hijack the consensus rules of bitcoin for its own gain. </p>

<p>My opinion is that the advantage of having fewer network hops isn't really much of an advantage. Its much more likely that many medium-sized hubs will be created, not the least reason being that people are going to want to connect to multiple different hubs in the case that one of them goes down for some reason. </p>

<p>So tl;dr, the LN doesn't really have a major centralization pressure, and even if it did, the centralization wouldn't cause any major problems. </p>

CC BY-SA 3.0
2017-06-18T01:54:41.290Z
2017-06-18T01:54:41.290Z
B T
<p>Sad to see people downvoting this question.  </p>

<p>Contrary to Harding's statement that "Lightning Network channels will naturally tend to form along the paths of economic activity", in LN channels... there are no such paths, there is no routing.. there are only channels with btc stuck between 2 parties.</p>

<p>So, yes, if one party is Amazon, you may be able to get an enormous amount of different goods.  And if it's your local tomato-farmer, you can only get tomatoes from them.  </p>

<p>So centralisation becomes a certainty in LN, be it coinbase, bitpay, amazon, of whomever is big enough to attract inflows of btc... the only incentive is to get big, and get big fast.  </p>

CC BY-SA 3.0
2016-04-15T03:17:29.983Z
`Sad to see people downvoting this question.` Huh? I don't see any downvotes on either Harding's answer or Murch's question.
Nick ODell
CC BY-SA 3.0
2016-04-15T04:36:44.377Z
Could you please cite a source for there being no routing in Lightning Network channels?  The protocol described in the LN paper (as well as the modifications to switch to a segwit-based construction and using shachains) describe a network that allows payments to be routed without intermediaries being able to steal any payments.
David A. Harding
CC BY-SA 3.0
2016-04-15T08:17:28.620Z
@NickODell: I think that he may be referring to the [/r/bitcoin topic I linked](https://www.reddit.com/r/Bitcoin/comments/4et9x4/is_centralization_in_the_lightning_network/) this in, it's currently at a score of zero.
Murch
CC BY-SA 3.0
2016-04-15T08:19:26.600Z
@linhares: Payment channels by themselves would only be useful for multi-payments, as most business relationships are asymmetric. My question is based on the fully implemented Lightning Network which includes payment routing.
Murch
CC BY-SA 3.0
2016-04-15T12:45:54.930Z
Premise in answer assumes LN locks funds between 2 parties and ignores the fact that despite that LN still allows to *routing* payments to other (than those 2) parties.
Jannes
CC BY-SA 3.0
2016-04-15T02:02:28.827Z
2016-04-15T02:02:28.827Z
linhares
<blockquote>
  <p>“Centralization” is now a word constantly repeated but is one that, generally speaking, 
   no one tries to define accurately.  ---Alexis de Tocqueville, Democracy in America, Vol.1, Part 1, ch.5. </p>
</blockquote>

<p>Lightning Network channels will naturally tend to form along the paths of economic
activity.  If you assume (as I do) that most economic activity in
Bitcoin today is from individuals to large Bitcoin businesses (mostly
exchanges), then you should further assume that most channels will be
between users and those very same large businesses.</p>

<p>You can call the centralization if you wish---but it is not a
centralization of Lightning's making; it is a centralization that already
exists for Bitcoin users.</p>

<p>Moreover, even though Bitcoin commerce and trading is dominated by large
businesses, there are quite a few of those large business.  I haven't
looked up figures, but I would suspect that Bitcoin commerce has a much
less centralized distribution than mining at the present time---and with
new businesses offering Bitcoin-payable services all the time, Bitcoin
commerce would seem to be in a steady of progressively becoming more
decentralized.</p>

CC BY-SA 3.0
2016-04-14T23:50:07.557Z
2016-06-20T14:07:50.617Z
2016-06-20T14:07:50.617Z
David A. Harding
<p>Especially keeping in mind the possibility of single-funded channels (see <a href="https://docs.google.com/presentation/d/1G4xchDGcO37DJ2lPC_XYyZIUkJc2khnLrCaZXgvDN0U/edit?pref=2&amp;pli=1#slide=id.g85f425098_0_121">Tadge's Google Doc Slides</a>), buying from an exchange and concurrently opening a payment channel on the Lightning network would seem a particularly simple entry to the LN. </p>

<p>Exchanges and payment-providers would therefore seem to be in a natural position to become well-connected. </p>

<ul>
<li>Is it fair to expect emergence of a network topology strongly centered around well-connected nodes such as the aforementioned and other liquidity providers? </li>
<li>What incentives are there for establishing additional connections with less well-connected nodes? </li>
<li>Is it reasonable to expect the network to "flesh out" with alternative connections around the center nodes?</li>
</ul>

CC BY-SA 3.0
2016-04-15T03:55:34.653Z
Frankly, I think we're like blind men describing an elephant. If the routing protocol hasn't been specified yet, we can't say whether the protocol as a whole is inherently X.
Nick ODell
CC BY-SA 3.0
2016-06-28T07:52:56.023Z
@NickODell There is some merit to this assessment, but luckily this question can just remain open and be updated with future information! :)
Murch
<lightning-network><decentralization><lightning-routing><ln-topology>
Is centralization in the Lightning network inevitable? Why (not)?
Murch
# Is centralization in the Lightning network inevitable? Why (not)?

(Asked by: username_0 on 2016-04-14)

Especially keeping in mind the possibility of single-funded channels (see [Tadge's Google Doc Slides](https://docs.google.com/presentation/d/1G4xchDGcO37DJ2lPC_XYyZIUkJc2khnLrCaZXgvDN0U/edit?pref=2&pli=1#slide=id.g85f425098_0_121)), buying from an exchange and concurrently opening a payment channel on the Lightning network would seem a particularly simple entry to the LN.

Exchanges and payment-providers would therefore seem to be in a natural position to become well-connected.

* Is it fair to expect emergence of a network topology strongly centered around well-connected nodes such as the aforementioned and other liquidity providers?
* What incentives are there for establishing additional connections with less well-connected nodes?
* Is it reasonable to expect the network to "flesh out" with alternative connections around the center nodes?

**Tags:** lightning-network, decentralization, lightning-routing, ln-topology

> **Comments:**
> **username_1**: Frankly, I think we're like blind men describing an elephant. If the routing protocol hasn't been specified yet, we can't say whether the protocol as a whole is inherently X.  
> **username_0**: @username_1 There is some merit to this assessment, but luckily this question can just remain open and be updated with future information! :)  

---

## 3 answers

### Answer by username_4 on 2016-04-14. Score: 17 | Accepted answer

> “Centralization” is now a word constantly repeated but is one that, generally speaking,
> no one tries to define accurately. ---Alexis de Tocqueville, Democracy in America, Vol.1, Part 1, ch.5.

Lightning Network channels will naturally tend to form along the paths of economic
activity. If you assume (as I do) that most economic activity in
Bitcoin today is from individuals to large Bitcoin businesses (mostly
exchanges), then you should further assume that most channels will be
between users and those very same large businesses.

You can call the centralization if you wish---but it is not a
centralization of Lightning's making; it is a centralization that already
exists for Bitcoin users.

Moreover, even though Bitcoin commerce and trading is dominated by large
businesses, there are quite a few of those large business. I haven't
looked up figures, but I would suspect that Bitcoin commerce has a much
less centralized distribution than mining at the present time---and with
new businesses offering Bitcoin-payable services all the time, Bitcoin
commerce would seem to be in a steady of progressively becoming more
decentralized.


---

### Answer by username_2 on 2017-06-18. Score: 3

The "centralization" that most people talk about is really about limiting who can effectively (and profitably) participate.

If we're talking about the blocksize debate, the idea is that larger block sizes require faster internet connections to remain competitive and at a certain point this might make it infeasible for any but a few large companies to be profitable mining blocks. If this is true, because bitcoin is essentially controlled by miners, this could lead to a different group of people controlling bitcoin than do now (ie perhaps a group we don't want controlling bitcoin).

If we're talking about the lightning network, the idea is that larger hubs would have the advantage over smaller hubs because they'd be more likely to have a route to whoever you want to pay and those routes are likely to have fewer hops. The thing is, if this is true it doesn't really affect Bitcoin. Even if the result is that everyone is connected to one single hub, that hub has 0 power to influence miners. If that megahub ends up being a bad actor, someone can easily switch to another hub. There might be some privacy issues with a megahub, and they could censor transactions, and that kind of thing, but it wouldn't be able to steal your bitcoins nor would it be able to hijack the consensus rules of bitcoin for its own gain.

My opinion is that the advantage of having fewer network hops isn't really much of an advantage. Its much more likely that many medium-sized hubs will be created, not the least reason being that people are going to want to connect to multiple different hubs in the case that one of them goes down for some reason.

So tl;dr, the LN doesn't really have a major centralization pressure, and even if it did, the centralization wouldn't cause any major problems.


---

### Answer by username_3 on 2016-04-15. Score: -3

Sad to see people downvoting this question.

Contrary to username_4's statement that "Lightning Network channels will naturally tend to form along the paths of economic activity", in LN channels... there are no such paths, there is no routing.. there are only channels with btc stuck between 2 parties.

So, yes, if one party is Amazon, you may be able to get an enormous amount of different goods. And if it's your local tomato-farmer, you can only get tomatoes from them.

So centralisation becomes a certainty in LN, be it coinbase, bitpay, amazon, of whomever is big enough to attract inflows of btc... the only incentive is to get big, and get big fast.

> **Comments:**
> **username_1**: `Sad to see people downvoting this question.` Huh? I don't see any downvotes on either username_4's answer or username_0's question.  
> **username_4**: Could you please cite a source for there being no routing in Lightning Network channels?  The protocol described in the LN paper (as well as the modifications to switch to a segwit-based construction and using shachains) describe a network that allows payments to be routed without intermediaries being able to steal any payments.  
> **username_0**: @username_1: I think that he may be referring to the [/r/bitcoin topic I linked](https://www.reddit.com/r/Bitcoin/comments/4et9x4/is_centralization_in_the_lightning_network/) this in, it's currently at a score of zero.  
> **username_0**: @username_3: Payment channels by themselves would only be useful for multi-payments, as most business relationships are asymmetric. My question is based on the fully implemented Lightning Network which includes payment routing.  
> **username_5**: Premise in answer assumes LN locks funds between 2 parties and ignores the fact that despite that LN still allows to *routing* payments to other (than those 2) parties.  

---

