How does the Lightning Network inherit Bitcoin's security?

Judging from price and trading volume data, inscriptions are regaining value. It seems that the craze for launching new assets through inscriptions has finally cooled down, and people are starting to ask a new question: beyond asset issuance, what else can actually be built?

Centralized trading and speculation are obviously not enough. Capital has made its choice: L2, an ecosystem direction capable of supporting greater liquidity and higher valuations. How hot is BTC L2 right now? If we include projects that have not yet been publicly announced, there are already hundreds under development. Still, we need to stay cautious: at present, only a very small number of L2s truly inherit the security of the Bitcoin mainnet.

This is especially true for chain-based L2s. Whether it is the security of multisignature bridges, data availability (DA), or even the safety of “escape hatches” in extreme situations, there are still no ideal answers today. Multisig bridges are a particularly important issue. Most L2 bridges currently on the market rely on a trust assumption — namely, that the multiple controllers of the bridge will not collude or behave maliciously.

When discussing BTC L2, we are in fact deeply influenced by Ethereum’s concept of L2 — some people even treat L2 as if it were the same thing as Rollup. Many security standards are also borrowed directly from Ethereum’s top-level definitions. However, it remains an open question whether Bitcoin scaling truly needs to follow Ethereum’s path of account models and smart contract support.

If we look back at the scaling solution that has been tested for years — although often criticized for its slow progress — and that currently has the highest TVL among Bitcoin scaling solutions, namely the Lightning Network, we may find more useful inspiration. It is worth emphasizing that, in the Bitcoin community’s understanding of scaling, the Lightning Network is also a form of L2. It simply gives up a considerable amount of extensibility within the blockchain scaling trilemma, including the smart contract functionality that many people want.

Of course, there are already many efforts underway to combine the Lightning Network with smart contracts, such as the RGB protocol.

After years of development, the Lightning Network has formed its own security framework:

Channel establishment mechanism:
Users create a two-party multisignature address on the Bitcoin blockchain that requires signatures from both private keys in order to authorize transactions. In this way, the two participants can establish a private payment channel between them.

Security foundation:
This payment channel relies on Bitcoin’s scripting language and transaction verification rules to ensure that funds can only be moved with mutual agreement. In other words, any transaction conducted through the payment channel inherits the cryptographic guarantees and validation security of the Bitcoin mainnet.

Conditional payment implementation:
HTLCs make conditional payments possible by requiring the recipient to provide the correct preimage within a specified time period in order to claim the payment.

Security guarantee:
HTLCs combine cryptographic hash functions with time locks to ensure that payments can be routed securely between nodes, while preventing any participant from fraudulently withholding or stealing funds. These contracts are ultimately enforced on the Bitcoin blockchain, which means they inherit its underlying security and immutability.

Decentralized routing:
The Lightning Network uses a decentralized routing model to discover a path between the payer and the recipient. Although the routing process itself occurs off-chain, final settlement and any necessary dispute resolution are ultimately handled on the Bitcoin blockchain.

Security and privacy:
By using private routing and onion routing, the Lightning Network protects the privacy of payment paths and prevents intermediate nodes from seeing the entire payment flow, thereby improving both network security and user privacy.

Automated monitoring:
Users can either monitor their channels themselves or rely on monitoring services to ensure that their counterparty does not attempt to broadcast an outdated state to the blockchain.

Penalty mechanism:
If one party tries to cheat by submitting an old channel state, the other party can respond with proof of the latest valid state and claim the cheater’s funds as a penalty. This creates a strong incentive to follow the rules, since dishonest behavior leads directly to economic loss. In essence, the game takes place off-chain, while fraud proofs and penalties are enforced on-chain.

In the end, capital votes with money. Judging from current TVL, the native Bitcoin community still mainly stays with the “orthodox” Lightning Network, which is focused on small-payment use cases. Yet Bitcoin capital, with a total network value of more than $850 billion, has still not been fully activated. Bringing that capital into a broader and richer ecosystem depends on whether a convincing security model can be provided — ideally, one with native security.

The large amount of BTC sitting idle in addresses is bound to attract many projects competing for it, and some are even trying to redefine what security means. In the domestic market, we can already see major industry figures openly debating the authenticity of certain technologies, such as whether the so-called zk rollups of Bitcoin L2s are truly real or merely marketing claims.

Overseas, the OP_CAT movement is gaining momentum, trying to push Bitcoin’s verification capabilities “one inch further.” In the coming months, we may witness a “War of Hundreds of L2s.” As projects move from testnet to mainnet, the security of these new L2s will be tested by both real users and hackers.

At the same time, there is also strong anticipation around whether Lightning Labs, with the support of Taproot Assets, can bring more diverse ecosystem use cases to the Lightning Network — a network that has already long carried the banner of “orthodoxy” and “security.”

UKey is the world’s first hardware wallet to fully support both the Lightning Network and Nostr, with complete App support as well. We look forward to building the BTC ecosystem together with everyone.