Over the past weekend, chaos broke out within the Bitcoin community after well-known developer Antoine Riard highlighted the presence of a backdoor in the code of the Lightning Network (LN) that could create serious damage to the security of the layer-2 network.
The vulnerability has reportedly been hidden from the public by the Lightning Network development team since December 2022, fueling speculation about the intentionality of this flaw in the code.
Meanwhile, advocate John Deaton, a supporter of the Ripple ecosystem, has suggested a viable alternative for spending Bitcoin in a P2P way without having to undergo the long wait times provided by the original network.
It is the “Spend The Bits” protocol, built on Ripple’s XRP Ledger, which allows for instant BTC payments between users who are part of the ecosystem.
Are we on the brink of the collapse of the Lightning Network? Will other infrastructures take its place? Is Bitcoin destined to travel at the speed of 5 TP/s?
All the answers in this article.
Summary
Lightning Network: the discovery of the presence a backdoor in the code Bitcoin’s L2
On Friday, 20 October, Bitcoin Core developer Antoine Riard alerted the entire crypto community by highlighting the presence of a backdoor within the Lightning Network code implemented perhaps intentionally.
Riard posted a lengthy thread about it on the Linux Foundation’s public mailing list, talking about the seriousness of the situation and announcing his abandonment in the infrastructure development of Bitcoin’s layer-2 protocol.
According to his words, the code vulnerability had already been identified by those in charge in December 2022, but it was preferred to leave the community in the dark to avoid FUD.
As of today, however, things could get ugly, and even a fix by developers would jeopardize the security of 5,355 BTC routed off-chain.
Initially, the Bitcoin Core developer’s report created uproar as the media labeled the bug in the software as the result of an intentional implementation, intended essentially to be able to create a critical point in the Lightning Network infrastructure.
The major owners of LN nodes blamed for the presence of the backdoor include the well-known companies Tether, Bitfinex, and Blockstream.
On Saturday, 21 October, a further post by Riard would, however, finally clarify that the vulnerability was not the result of a premeditated move even though it could nevertheless have been corrected months ago without additional complications.
We remain waiting now to see how the community dedicated to the technical development of the Lightning Network will move forward, and which path Bitcoin stakeholders will choose.
Chaos among the bitcoin community
Following a report by developer Antoine Riard, chaos broke out among the Bitcoin community, creating heavy debates and leading users to discuss the possible replacement of the Lightning Network with another protocol capable of scaling cryptocurrency.
Among the various posts on Twitter about this, there would be those who proposed alternatives to exchange bitcoin quickly using Ripple’s XRP Ledger, more specifically the “Spend The Bits” app.
Other parties have pointed out that adoption of the Lightning Network is currently very low and it might make sense to abandon L2 given that it moves only $500,000 a day in volume, 1,000 times less than Ethereum, which handles volumes of $500 million every day.
In any case, the efforts made in recent years to support the P2P exchange protocol have been remarkable and in the coming years the expectations for growth are high given and considering the investments of private individuals in this niche market.
Will Clemente, founder of Reflexivity Research, recently reported on a study by the River company regarding the development of Bitcoin’s Lightning Network, highlighting that in 2022 companies working on top of this infrastructure received $428 million in funding about nine times the amount reached in 2021.
Despite the optimism for the future of the technology in Bitcoin’s home, there is still an admission to be made that 14,062 nodes and 62,653 channels are at risk of seeing more than 5,000 BTC evaporate, or over $160 million.
Many have argued that Riard’s decision to abandon the project is significant of the seriousness of the situation and that a possible “fix” of the code is not so simple since it requires the coordinated intervention of all full nodes.
This kind of intervention would cause a momentary halt to some of the security measures geared toward protecting the sats in the Lightning Network, causing the catastrophe that they would be working to avert.
It will not be easy to get out of this puzzle: we just have to wait for new twists in the case with insiders likely to propose their own solution in the coming days.
In the meantime, it remains extremely interesting to observe, as reported by user X “mononaut” and contributor to the Bitcoin ecosystem, how an attack on the Lightning Network could technically take place by exploiting the alleged backdoor.
Advocate John Deaton, a well-known Ripple supporter, considers the “Spend The Bits” protocol superior to Bitcoin’s Lightning Network
Among those suggesting an alternative protocol for instant Bitcoin transactions is Ripple advocate John Deaton, who a few days ago explicitly stated that the “Spend The Bits” app built on the XRP Ledger is much better performing than the Lightning Network.
Deaton for transparency reminded his audience that he is an angel investor in Ripple’s project, as well as its legal manager, and hence may be biased in this diatribe.
In any case, the lawyer points out that the protocol that relies on the XRP Ledger allows Bitcoin payments to scale by leveraging a hybrid architecture that relies on decentralized and centralized databases at the same time.
Spend The Bits, would in his view be “a more secure method of using Bitcoin than the Lightning Network.”
The app in question is trivially a digital payment platform that allows users to send, spend and receive Bitcoin using a unique identifier called PayString.
In a similar way to sending e-mail, Paystring acts as a universal identifier allowing the generic transfer of value among the community.
This approach uses a principal address to represent any number of subaddresses on any payment network, centralized or decentralized.
The Spend The Bits protocol enables Bitcoin payments at the various merchants and vendors that accept BTC as currency.
Since the app is built on Ripple’s XRP Ledger, it makes sense that these much-acclaimed bitcoin transfers do not occur natively within the Bitcon network, nor even using a layer-2 that leaves two reference transactions in the main network, as is the case with the Lightning Network.
In this instance, the use of bitcoin is tied to the bridging of the currency itself, which, being “carried” on the XRP Ledger, would no longer be part of its core infrastructure, with all the associated risks of consensus and decentralization.
Although, hence, Spend The Bits could be a viable alternative to LN for a niche market, it is unthinkable that this protocol could replace it permanently.
As attorney John Deaton mistakenly describes, the app is no more secure than the Lightning Network: bridging cross-chain assets, especially between blockchains that do not support smart contracts such as Bitcoin’s, is a complex and risky operation.
In addition, the presence of centralized components in the Ripple network consensus and data management of the app represent potential vehicles for attack, which Satoshi Nakamoto and early Bitcoin developers have always tried to stay away from.
