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Bitcoiners Warn After User Documents Losing $32,000 in BTC: Lightning Network is High Risk

TL;DR: Bitcoiners took to two popular cryptocurrency subreddits, essentially warning current and potential users about the Lightning Network (LN), a second layer solution to BTC’s notorious scaling issues of high transaction fees and slow confirmation times. The latest complaints about LN come after a user documented losing 4 BTC (around $32,000 at the time) in an otherwise very pro-BTC/LN forum. 

Lightning Network User Documents Losing $32,000

It was only last week Lightning aficionados were hobnobbing in Berlin, Germany — a show of force for an inaugural conference bent upon highlighting the tech’s off-chain superiority. Private companies, such as Blockstream and Lightning Labs, dedicated to funneling so-called micro-transactions onto a second layer away from the BTC blockchain, in order to apparently preserve security and allow anyone to run a node, were well-represented.

Lightning Network

Indeed, tens of millions have been invested in both businesses, and count among their most famous funding cheerleaders the mercurial Jack Dorsey, CEO of both Twitter and Square, the latter of which boosts BTC through its Cash App (another supposed micro-payments play). Curiously the conference made little-to-no mention of LN’s recent and on-going issues for users.

Since the Berlin soirée two reports, one academic and now the other anecdotal, appear to point toward serious structural problems with Lightning. The latest troubling testimonial is in the form of a Reddit post on r/Bitcoin by LN user INWHY, revealing a panic-riddled conversation. “Am I able to [lose] money after force-closing channels?” he asks, showing screenshots. One answer from Will O’Beirne confirmed, “Yes, if you force close using an older invalid state, they can take the money while it’s timelocked if their node is online.”

That’s How It Is

INWHY, it turns out operates one of LN’s largest nodes, lighting-casino.com. “Wow,” INWHY continues, “… looks like I lost 4BTC because my LND wasn’t syncronised, that’s weird.” Another commenter then jumps-in, accusing INWHY of being reckless by placing too many funds in LN, insisting INWHY’s node was probably useless.

The two then go through what might have gone wrong, getting into the weeds and machinations of attempting to navigate LN’s design. INWHY is chastized for forcing closed a channel from an older state, something commenter ‘moli’ refers to as “a ‘no-no” because “it’s a breach.” INWHY further explains having to work around a power outage, apparently necessitating the force-closing.

Lightning Network

It’s an expensive lesson: at the time of posting, BTC was trading around $8,000. Nevertheless, INWHY puts his experience into perspective, “I’m working as a system administrator, have some server knowledge and I bet that everybody who [has a] bigger node will face the same issues, it happens only when you close* [your] channels, openings are fine.” At that, moli agrees, noting, “so the backup is a few days old? even a few minutes or hours old, they can cause a breach, that’s how it is.” The two seem to avoid the obvious — non-technical users would be hopelessly lost in such a scenario.

The exchange was enough for popular, competing subreddit r/BTC moderators to post an overt warning about Lightning Network. “At this stage,” the post blasted, “it has become abundantly clear that LN is not safe to use at this time, and anyone that uses it is at a very high risk of losing funds.” The warning came complete with links to a steady stream of media reports of continual problems with Lightning.

Lightning Network

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