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Article

A Tale of Two Layers: The Mutual Relationship between Bitcoin and Lightning Network

1
Department of Management, Economics and Industrial Engineering, Politecnico di Milano, 20121 Milan, Italy
2
Data Science and Artificial Intelligence, Intesa Sanpaolo, 20121 Milan, Italy
*
Author to whom correspondence should be addressed.
The views expressed in this paper are those of the author and should not be attributed to Intesa Sanpaolo or to the author as representative or employee of Intesa Sanpaolo.
Risks 2020, 8(4), 129; https://doi.org/10.3390/risks8040129
Received: 27 October 2020 / Revised: 23 November 2020 / Accepted: 26 November 2020 / Published: 1 December 2020
(This article belongs to the Special Issue Computational Methods in Quantitative Risk Management)
A major concern of the adoption and scalability of Blockchain technologies refers to their efficient use for payments. In this work, we analyze how Lightning Network (LN), which represents a relevant infrastructural novelty, is influenced by the market dynamics of its referring cryptocurrency, namely Bitcoin. In so doing, we focus on how the LN is efficient in performing transactions and we relate this feature to the market conditions of Bitcoin. By applying the Toda–Yamamoto variant of Granger-causality, we note that market conditions of Bitcoin do not significantly influence the topological configuration of the LN. Hence, although the LN represents a second layer on the Bitcoin blockchain, our findings suggest that its efficient functioning does not appear to be related to the simple market performance of its underlying cryptocurrency and, in particular, of its volatile market fluctuations. This result may therefore contribute to shed light on the practical usage of the LN as a blockchain technology to favor transactions. View Full-Text
Keywords: bitcoin; lightning network; granger causality; market efficiency; global efficiency bitcoin; lightning network; granger causality; market efficiency; global efficiency
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MDPI and ACS Style

Martinazzi, S.; Regoli, D.; Flori, A. A Tale of Two Layers: The Mutual Relationship between Bitcoin and Lightning Network. Risks 2020, 8, 129. https://doi.org/10.3390/risks8040129

AMA Style

Martinazzi S, Regoli D, Flori A. A Tale of Two Layers: The Mutual Relationship between Bitcoin and Lightning Network. Risks. 2020; 8(4):129. https://doi.org/10.3390/risks8040129

Chicago/Turabian Style

Martinazzi, Stefano, Daniele Regoli, and Andrea Flori. 2020. "A Tale of Two Layers: The Mutual Relationship between Bitcoin and Lightning Network" Risks 8, no. 4: 129. https://doi.org/10.3390/risks8040129

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