Bitcoin Lightning Network
When speaking to critics of bitcoin, one of their major concerns regarding the cryptocurrency is it’s slow transaction time. This could be set to change though with the bitcoin lightning network, which could see it compete with bitcoin cash, dash coin, lite coin and ripple.
So what is bitcoin lightning network? The idea was first proposed by Thaddeus Dryja and Joseph Poon in a white paper in 2015. The basic premise behind it is that it gives people the chance to make transfers between each other without having to make the transactions public on the blockchain.
In simple terms, the transaction works by allowing users to transfer between each other an infinite amount of times. The transactions go backwards and forwards, before eventually being placed on the blockchain all at once. The process is still as secure as the original method, and it allows fast, secure and constant payments to take place.
To get a bit more technical; when a payment is sent via lightning both parties deposit the funds to one bitcoin address, at which the number of times they can exchange the funds is limitless. The transactions are then added to the underlying blockchain once the channel is closed.
As previously mentioned the transaction time of bitcoin is slow; in fact it is one of the slowest processing coins available, so for many people bitcoin lightning is a vital improvement. Lighting is also popular amongst traditionalists because keeps a lot of bitcoin’s popular features, and it leaves the block size limit unchanged, but in theory can allow a larger number of payments to take place.
To put into perspective the transactions times of bitcoin; ripple can currently do 1,500 transactions per second whereas lite coin and dash can do 56 and 48 respectively. This compares with a meagre three per second that bitcoin is currently limited to.
On bitcoin forums across the internet the talk has been that the lightning network could be the answer to all of bitcoin’s problems, although one question that is being asked is if the Lightning Network becomes widely used, then what could this do to the bitcoin price?
If the Lightning Network is widely adopted then it would be the biggest change to how it works since its inception ten years ago. There are many experts that believe that this would mean an increase to the price which has dipped significantly since the highs of December 2017.
This would be because it should increase the number of transactions that happen daily, a the quicker transaction times would make Bitcoin more suitable for daily tasks such as buying lunch. This can even be noticed in the recent small increase in price which coincided with the release of Bitcoin Lightning.
Whether bitcoin lightning takes off and turns out to be something of a revolution in the word of cryptocurrency remains to be seen, however many experts are predicting that this could result in a big change in how bitcoin operates, and be a major upgrade to how things work.
About the Author:
Ian Scarffe is a serial entrepreneur, investor, key opinion leader and Blockchain consultant with business experience from around the world.
As a leading entrepreneur, Ian is on a personal mission to develop a culture of entrepreneurship, helping startups achieve their full potential as well as helping to expand existing companies.
Ian has founded ‘Binkplus’, a startup incubator in Europe. Ian is an Independent Expert at the European Commission – Horizon 2020
An expert in Startup, Investment, Fintech, Web3 and Blockchain industries. Ian currently consults and advises for a range of multi-million dollar companies.
Ian’s overall mission is to foster a society of economically independent individuals who are engaged citizens, contributing to the improvement of their communities across the world.
Ian Scarffe has written two books to help others:
The Ultimate Guide to Bitcoin and Cryptocurrency 2018 Blockchain Basics 2020
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