UCL Discovery
UCL home » Library Services » Electronic resources » UCL Discovery

A percolation model for the emergence of the Bitcoin Lightning Network

Bartolucci, S; Caccioli, F; Vivo, P; (2020) A percolation model for the emergence of the Bitcoin Lightning Network. Scientific Reports , 10 (1) , Article 4488. 10.1038/s41598-020-61137-5. Green open access

[thumbnail of s41598-020-61137-5.pdf]
Preview
Text
s41598-020-61137-5.pdf - Published version

Download (1MB) | Preview

Abstract

The Lightning Network is a so-called second-layer technology built on top of the Bitcoin blockchain to provide "off-chain" fast payment channels between users, which means that not all transactions are settled and stored on the main blockchain. In this paper, we model the emergence of the Lightning Network as a (bond) percolation process and we explore how the distributional properties of the volume and size of transactions per user may impact its feasibility. The agents are all able to reciprocally transfer Bitcoins using the main blockchain and also - if economically convenient - to open a channel on the Lightning Network and transact "off chain". We base our approach on fitness-dependent network models: as in real life, a Lightning channel is opened with a probability that depends on the "fitness" of the concurring nodes, which in turn depends on wealth and volume of transactions. The emergence of a connected component is studied numerically and analytically as a function of the parameters, and the phase transition separating regions in the phase space where the Lightning Network is sustainable or not is elucidated. We characterize the phase diagram determining the minimal volume of transactions that would make the Lightning Network sustainable for a given level of fees or, alternatively, the maximal cost the Lightning ecosystem may impose for a given average volume of transactions. The model includes parameters that could be in principle estimated from publicly available data once the evolution of the Lighting Network will have reached a stationary operable state, and is fairly robust against different choices of the distributions of parameters and fitness kernels.

Type: Article
Title: A percolation model for the emergence of the Bitcoin Lightning Network
Location: England
Open access status: An open access version is available from UCL Discovery
DOI: 10.1038/s41598-020-61137-5
Publisher version: https://doi.org/10.1038/s41598-020-61137-5
Language: English
Additional information: © The Author(s) 2020. This article is licensed under a Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/).
Keywords: Applied mathematics, Complex networks
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > Dept of Computer Science
URI: https://discovery.ucl.ac.uk/id/eprint/10094487
Downloads since deposit
39Downloads
Download activity - last month
Download activity - last 12 months
Downloads by country - last 12 months

Archive Staff Only

View Item View Item