Is scaling the lightning network possible?
There is a problem with the Lightning Network: it doesn't scale, or at least the way we need it to. If you've paid attention, you understand that routing with the lightning network isn't as straightforward as one would expect.
It can be summarized into two main issues: One, the lightning network is in a constant state of extreme change. Channels are constantly opening and closing, nodes going online and offline, channel states being updated with funds sliding from one side to another, routing paths may be open and available one second, and unavailable or completely gone the next. And two, your node has to be the one that goes through all of this data find all of the available paths, take into account the number of hops, relay prices, then compare every path and eliminate the possibilities down until the optimal path is found for your payment.
This entire path finding task is handled by the sending node, which is in most cases either a laptop, smartphone or Raspberry Pi. And unlike a Blockchain there isn't a network history stored, the network must be mapped from scratch, every single transaction. So we eventually hit a ceiling, there's too much data, too many nodes, channels and changes for your hardware to be able to process. Where the ceiling is, we can't be exactly sure, but to quote Rusty Russell, one of the Lighting developers of Blockstream there are protocol scaling issues and implementation scaling issues, all channel updates are broadcast to everyone how badly that will suck depends on how fast updates happen, but it's likely to get painful somewhere between 10,000 and one million channels.
The unknown gap between 10,000 and 1 million channels is pretty wide. It's recommended that each node have around 14 open channels to stay decentralized, and each user must run their own node set. So assuming the average channel count of the users around 10 or so, the Lighting Network's maximum user base is anywhere between 1000 and 100,000 users. Coinbase, a single bitcoin exchange, can have 100,000 new user registrations in a single day. The optimistic maximum user capacity for the Lightning Network is around one day worth of new users.
What about the users from the past 10 years? And all the new users signing up each day Routing sort of works now because we're at the lower end of the possible capacity, and users are opening very few channels each. But in the very near future as the network grows, it will come to a screeching halt. Routing is still completely unsolved . Even the lightning network whitepaper, which is 57 pages long doesn't even touch on how this will be done.
Routing is summarized in a single paragraph that simply states that routing is theoretically possible, without any explanation on how this may be done. Blockchain research company Bitfury wrote a separate whitepaper on an improved routing method "Flare", which is 38 pages alone. Flare scales to around 100,000 users as well. Routing is just one of the many unsolved problems that Lightning has. It's a very long way off from being able to handle any meaningful number of users if it's even possible to do in a decentralized way.
After years of being constantly told that the Lightning Network is just around the corner and just toward a few more months, users are starting to realize that Lightning as an offchain scaling solution is not quite what is purported to be. The status of the Lightning Network being unable to scale offchain to meet any user demand raises an interesting question: why has the Bitcoin Core team completely stopped onchain scaling? if offchain scaling is struggling to scale up to a single day's worth of new users even after three years of active development. Why then have they become the focus of the BTC chain? Every attempt at raising the block size in the past several years have all been shut down immediately, or delegitimized with no compromise. Could it be that onchain scaling is being halted for other reasons?