The Impact of Layer 2 Technologies on the Adoption and Security of Blockchain

Leonardo Maria De Rossi; Michel Avital; Rob Gleasure; Rebecca Solcia

The Impact of Layer 2 Technologies on the Adoption and Security of Blockchain

Leonardo Maria De Rossi, Michel Avital, Rob Gleasure, Rebecca Solcia

Department of Digitalization

Bocconi University

Research output: Chapter in Book/Report/Conference proceeding › Article in proceedings › Research › peer-review

Abstract

Numerous studies have raised concerns over the limited scalability of blockchain technologies and, in particular, Bitcoin. Layer 2 technologies have emerged as an advanced array of complementary innovations designed to solve this problem. Despite the growing optimism around layer 2 technologies, however, there is little evidence to show how they impact blockchain’s long-term success. This paper argues that the use and expansion of layer 2 technologies have a positive impact on the adoption and security levels of the underlying blockchain systems. Building on the Bitcoin and Lightning Network case, we use a time-series model based on 1,494 daily observations to demonstrate that the growing activity on the Lightning Network precipitates increased use and better security for Bitcoin. These results highlight the importance of layer 2 technologies for blockchain systems and suggest several further research avenues in this nascent domain of inquiry.

Original language	English
Title of host publication	Proceedings of the 43rd International Conference on Information Systems (ICIS) : Digitization for the Next Generation
Editors	Tilo Böhmann, Kai-Lung Hui, Viswanath Venkatesh
Number of pages	17
Place of Publication	Atlanta, GA
Publisher	Association for Information Systems. AIS Electronic Library (AISeL)
Publication date	2022
Article number	1501
Publication status	Published - 2022
Event	The 43rd International Conference on Information Systems: ICIS 2022: Digitization for the Next Generation - Copenhagen, Denmark Duration: 9 Dec 2022 → 14 Dec 2022 Conference number: 43 https://icis2022.aisconferences.org/

Conference

Conference	The 43rd International Conference on Information Systems: ICIS 2022
Number	43
Country/Territory	Denmark
City	Copenhagen
Period	09/12/2022 → 14/12/2022
Internet address	https://icis2022.aisconferences.org/

Series	Proceedings of the International Conference on Information Systems
ISSN	0000-0033

Keywords

Blockchain
Layer 2 technologies
Bitcoin
Lightning Network
Adoption
Security

Access to Document

https://aisel.aisnet.org/icis2022/blockchain/blockchain/6/Licence: Unspecified

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Cite this

De Rossi, L. M., Avital, M., Gleasure, R., & Solcia, R. (2022). The Impact of Layer 2 Technologies on the Adoption and Security of Blockchain. In T. Böhmann, K.-L. Hui, & V. Venkatesh (Eds.), Proceedings of the 43rd International Conference on Information Systems (ICIS): Digitization for the Next Generation Article 1501 Association for Information Systems. AIS Electronic Library (AISeL). https://aisel.aisnet.org/icis2022/blockchain/blockchain/6/

De Rossi, Leonardo Maria ; Avital, Michel ; Gleasure, Rob et al. / The Impact of Layer 2 Technologies on the Adoption and Security of Blockchain. Proceedings of the 43rd International Conference on Information Systems (ICIS): Digitization for the Next Generation. editor / Tilo Böhmann ; Kai-Lung Hui ; Viswanath Venkatesh. Atlanta, GA : Association for Information Systems. AIS Electronic Library (AISeL), 2022. (Proceedings of the International Conference on Information Systems).

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title = "The Impact of Layer 2 Technologies on the Adoption and Security of Blockchain",

abstract = "Numerous studies have raised concerns over the limited scalability of blockchain technologies and, in particular, Bitcoin. Layer 2 technologies have emerged as an advanced array of complementary innovations designed to solve this problem. Despite the growing optimism around layer 2 technologies, however, there is little evidence to show how they impact blockchain{\textquoteright}s long-term success. This paper argues that the use and expansion of layer 2 technologies have a positive impact on the adoption and security levels of the underlying blockchain systems. Building on the Bitcoin and Lightning Network case, we use a time-series model based on 1,494 daily observations to demonstrate that the growing activity on the Lightning Network precipitates increased use and better security for Bitcoin. These results highlight the importance of layer 2 technologies for blockchain systems and suggest several further research avenues in this nascent domain of inquiry.",

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booktitle = "Proceedings of the 43rd International Conference on Information Systems (ICIS)",

publisher = "Association for Information Systems. AIS Electronic Library (AISeL)",

note = "The 43rd International Conference on Information Systems: ICIS 2022 : Digitization for the Next Generation, ICIS 2022 ; Conference date: 09-12-2022 Through 14-12-2022",

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De Rossi, LM, Avital, M , Gleasure, R & Solcia, R 2022, The Impact of Layer 2 Technologies on the Adoption and Security of Blockchain. in T Böhmann, K-L Hui & V Venkatesh (eds), Proceedings of the 43rd International Conference on Information Systems (ICIS): Digitization for the Next Generation., 1501, Association for Information Systems. AIS Electronic Library (AISeL), Atlanta, GA, Proceedings of the International Conference on Information Systems, The 43rd International Conference on Information Systems: ICIS 2022, Copenhagen, Denmark, 09/12/2022. <https://aisel.aisnet.org/icis2022/blockchain/blockchain/6/>

The Impact of Layer 2 Technologies on the Adoption and Security of Blockchain. / De Rossi, Leonardo Maria; Avital, Michel ; Gleasure, Rob et al.
Proceedings of the 43rd International Conference on Information Systems (ICIS): Digitization for the Next Generation. ed. / Tilo Böhmann; Kai-Lung Hui; Viswanath Venkatesh. Atlanta, GA: Association for Information Systems. AIS Electronic Library (AISeL), 2022. 1501 (Proceedings of the International Conference on Information Systems).

Research output: Chapter in Book/Report/Conference proceeding › Article in proceedings › Research › peer-review

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T1 - The Impact of Layer 2 Technologies on the Adoption and Security of Blockchain

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AB - Numerous studies have raised concerns over the limited scalability of blockchain technologies and, in particular, Bitcoin. Layer 2 technologies have emerged as an advanced array of complementary innovations designed to solve this problem. Despite the growing optimism around layer 2 technologies, however, there is little evidence to show how they impact blockchain’s long-term success. This paper argues that the use and expansion of layer 2 technologies have a positive impact on the adoption and security levels of the underlying blockchain systems. Building on the Bitcoin and Lightning Network case, we use a time-series model based on 1,494 daily observations to demonstrate that the growing activity on the Lightning Network precipitates increased use and better security for Bitcoin. These results highlight the importance of layer 2 technologies for blockchain systems and suggest several further research avenues in this nascent domain of inquiry.

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De Rossi LM, Avital M , Gleasure R, Solcia R. The Impact of Layer 2 Technologies on the Adoption and Security of Blockchain. In Böhmann T, Hui KL, Venkatesh V, editors, Proceedings of the 43rd International Conference on Information Systems (ICIS): Digitization for the Next Generation. Atlanta, GA: Association for Information Systems. AIS Electronic Library (AISeL). 2022. 1501. (Proceedings of the International Conference on Information Systems).