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Department of Informatics Blockchain and Distributed Ledger Technologies

Centralization of the blockchain-based system

In our group, we also focus on the centralization of the Bitcoin system from its second layer payment protocol: Lightning Network (LN). To this end, we collect the data sets of the LN over a period of 18 months, ranging from 12th January 2018 to 17th July 2019, at the end of which the network has reached 8216 users, 122517 active channels and 2732.5 transacted Bitcoins. By studying the topological properties of the binary and weighted Bitcoin lightning network, we find that the total volume of transacted bitcoins approximately grows as the square of the network size; however, despite the huge activity characterising the BLN, the bitcoins distribution is very unequal: the average Gini coefficient of the node strengths (computed across the entire history of the Bitcoin Lightning Network) is, in fact,0.88causing the10%(50%) of the nodes to hold the80%(99%) of the bitcoins at stake in the BLN (on average, across the entire period). This concentration brings up the question of which minimalist network model allows us to explain the network topological structure. Like for other economic systems, we hypothesise that local properties of nodes, like the degree, ultimately deter-mine part of its characteristics. Therefore, we have tested the goodness of the Undirected Binary ConfigurationModel (UBCM) in reproducing the structural features of the BLN: the UBCM recovers the disassortative and the hierarchical character of the BLN but underestimates the centrality of nodes; this suggests that the BLN is becoming an increasingly centralised network, more and more compatible with a core-periphery structure.Further inspection of the resilience of the BLN shows that removing hubs leads to the collapse of the network into many components, an evidence suggesting that this network may be a target for the so-called split attacks.