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Bitcoin Lightning Network is 48% Centralized on AWS & Google Cloud

Last Updated August 3, 2023 2:04 PM
Omar Elorfaly
Last Updated August 3, 2023 2:04 PM

Key Takeaways

  • Nearly half of Bitcoin Lightning operations rely on AWS and Google Cloud
  • The reliance on centralized cloud services eliminates the risk of lost funds
  • Crypto exchanges are rushing to integrate BLT to establish dominance in the crypto market

Many crypto exchanges are now working toward integrating the Bitcoin Lightning Network  into their platforms, aiming to reduce transaction fees and processing times. Data  shows that BLT relies on several centralized cloud services, such as Amazon Web Services (AWS) and Google Cloud, for data processing.

Bitcoin Lightning Network Centralization chart
BLT relies on centralized cloud services such as Google Cloud and Amazon Web Services

But, why would decentralized crypto institutions opt for centralized cloud services as the basis of their token transactions?

Centralized Cloud Services Are More Reliable

Data from Mempool  shows that BLT relies in the capacities of 19% on Google Cloud and 29% on AWS for transaction processing. DataWeb Global Group also carries over 12% of BLT’s load. 

The reliance on such cloud services aims to avoid risks posed by depending on individual BLT nodes. 

Through the Bitcoin Lightning Network transactions can take place in a decentralized manner if both parties involved are online. Should one of the parties go offline, funds may be lost in the process.

By relying on centralized cloud services such as AWS, such risks can be mitigated as the platform handles transaction data instead.

Lightning As A Service

A form of company is now emerging in the crypto space called Lightning as a Service (LaaS). Among the prominent names in the LaaS industry is Voltage.

Google recently announced  its partnership with Voltage to offer “enterprises with a Lightning Network solution that enables the settlement of real-time payments with near-zero fees, enabling organizations to send and receive payments while creating new experiences and business models.”

Google Bitcoin Lightning node setup
Google announces its Bitcoin Lightning Network platform in partnership with Voltage

The announcement states that “Voltage is working with Google Cloud to expand hosting providers and locations. Through this collaboration, customers can create Bitcoin and Lightning Nodes in Google Cloud at various locations worldwide. Customers can deploy their workloads globally via two leading providers using Voltage and Google Cloud.”

Finally, the announcement clarifies the purpose behind the partnership, claiming that it would: 

  • Capability to serve a global audience across different regions, with initial operations in Iowa, Netherlands, and Singapore
  • Deployments on a leading cloud with superior availability and networking
  • The ability to effortlessly run a Bitcoin infrastructure close to existing workloads

CCN reached out to Voltage for commentary but did not receive a reply at the time of publishing.

Global Exchanges Switch To Lightning

Last month, the world’s leading crypto exchange, Binance, announced the integration of BLT into its platform in an effort to reduce transaction costs and processing durations.

Following suit, Coinbase, the biggest US-based exchange also announced its plans to integrate BLT into its platform. The announcement came after Twitter co-founder Jack Dorsey asked Coinbase’s CEO, Brian Armstrong, why the company hadn’t made the move yet. 

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