This last year has been a record-breaking one for the cryptocurrency industry. Bitcoin and other cryptocurrencies have soared and continuously climbed in value. However, there are still widespread issues on the bitcoin network, several of which are being promised to be fixed by its latest addition to the family, the lightning network.
The bitcoin network is often associated with costly and lagging transactions, which in turn discourages bitcoin holders from using their holdings for day-to-day purchases. So far, the bitcoin community of developers has not yet come up with an efficient solution to address these issues.
However, three prominent blockchain startups have collaborated to develop a feasible solution, known as the Lightning Network. Lightning Labs, ACINQ, and Blockstream have teamed up to create a network that functions in the main network while allowing users to conduct their transactions in real time.
The Lightning Network is perfect for everyday small purchases. During a recent test, a user successfully and instantly bought a Yallz.org article and cup of coffee all in real time. The transactions were instantly verified on the network's nodes, which are spread all over the world. This is indicative of the network's global interoperability.
Even Litecoin founder, Charlie Lee, took to Twitter to sing the network’s praises:
https://twitter.com/SatoshiLite/status/939952738577739776
One of bitcoin’s biggest issues has always been scalability. The cryptocurrency’s limited block size means that the network can only confirm and process a maximum of three to four transactions per second. In comparison, the VISA network confirms up to 24,000 transactions per second. This has led to a highly congested network and extremely slow transaction times, in addition to exorbitant transaction fees. The problem has only grown more serious as more investors have flocked to the cryptocurrency.
A bitcoin transaction on its blockchain network is only confirmed once it has been validated by its network of nodes, using a process known as mining. In mining, the transaction becomes confirmed by a series of complex mathematical problems that are solved by an equally complex system of hardware. Nodes are rewarded proportionally to their efforts in bitcoin. Once the transaction has been verified, it is stored on the blockchain network, using the two parties’ online pseudonym to protect user privacy.
However, the Lightning Network works radically different from traditional blockchain payments. The Lightning Network uses off-chain transaction and divides them into separate groups before adding them on-chain in a single turn. This greatly quickens the transaction time and lowers the fees involved. While the Lightning Network still requires its own nodes, it has been designed to be more accessible, as even computers with low CPUs or GPUs can act as a Lightning Network node.
Once implemented, the Lightning Network could solve several problems encountered by bitcoin users and could add some utility to the cryptocurrency.
According to the entrepreneur and author of 'Mastering Bitcoin', Andrea Antonopoulis, because the block sizes are no longer so small and limited, the costs will be marginal compared to current bitcoin transaction fees.
Several crypto developers, including the Litecoin Founder, Charlie Lee, have been very supportive of Lightning Network. However, some are worried that the Lightning Network could perhaps kill off its parent network, the main bitcoin network. Lee argues that even if Lightning Network became the preferred payment option, it cannot accommodate every single crypto user in the world. There will always be a need for the bitcoin network, even if the need becomes smaller. Lee also believes that the Lightning Network could prove to be an efficient bridge between cryptocurrencies, such as bitcoin and litecoin, as it will become more economically feasible to swap out currencies. However, the possibility of this is yet to be determined.
The Lightning Network has an unusually small development team, meaning that it could be months before a fully functioning version of the network can become implemented. According to Investopedia, the network also still has to address several security concerns before launching it. However, the Lightning Network is one of the most promising solutions to a network that rapidly becoming more crowded as investors flock to be part of the crypto gold rush.
The bitcoin network is often associated with costly and lagging transactions, which in turn discourages bitcoin holders from using their holdings for day-to-day purchases. So far, the bitcoin community of developers has not yet come up with an efficient solution to address these issues.
However, three prominent blockchain startups have collaborated to develop a feasible solution, known as the Lightning Network. Lightning Labs, ACINQ, and Blockstream have teamed up to create a network that functions in the main network while allowing users to conduct their transactions in real time.
The Lightning Network is perfect for everyday small purchases. During a recent test, a user successfully and instantly bought a Yallz.org article and cup of coffee all in real time. The transactions were instantly verified on the network's nodes, which are spread all over the world. This is indicative of the network's global interoperability.
Even Litecoin founder, Charlie Lee, took to Twitter to sing the network’s praises:
https://twitter.com/SatoshiLite/status/939952738577739776
One of bitcoin’s biggest issues has always been scalability. The cryptocurrency’s limited block size means that the network can only confirm and process a maximum of three to four transactions per second. In comparison, the VISA network confirms up to 24,000 transactions per second. This has led to a highly congested network and extremely slow transaction times, in addition to exorbitant transaction fees. The problem has only grown more serious as more investors have flocked to the cryptocurrency.
A bitcoin transaction on its blockchain network is only confirmed once it has been validated by its network of nodes, using a process known as mining. In mining, the transaction becomes confirmed by a series of complex mathematical problems that are solved by an equally complex system of hardware. Nodes are rewarded proportionally to their efforts in bitcoin. Once the transaction has been verified, it is stored on the blockchain network, using the two parties’ online pseudonym to protect user privacy.
However, the Lightning Network works radically different from traditional blockchain payments. The Lightning Network uses off-chain transaction and divides them into separate groups before adding them on-chain in a single turn. This greatly quickens the transaction time and lowers the fees involved. While the Lightning Network still requires its own nodes, it has been designed to be more accessible, as even computers with low CPUs or GPUs can act as a Lightning Network node.
Once implemented, the Lightning Network could solve several problems encountered by bitcoin users and could add some utility to the cryptocurrency.
According to the entrepreneur and author of 'Mastering Bitcoin', Andrea Antonopoulis, because the block sizes are no longer so small and limited, the costs will be marginal compared to current bitcoin transaction fees.
Several crypto developers, including the Litecoin Founder, Charlie Lee, have been very supportive of Lightning Network. However, some are worried that the Lightning Network could perhaps kill off its parent network, the main bitcoin network. Lee argues that even if Lightning Network became the preferred payment option, it cannot accommodate every single crypto user in the world. There will always be a need for the bitcoin network, even if the need becomes smaller. Lee also believes that the Lightning Network could prove to be an efficient bridge between cryptocurrencies, such as bitcoin and litecoin, as it will become more economically feasible to swap out currencies. However, the possibility of this is yet to be determined.
The Lightning Network has an unusually small development team, meaning that it could be months before a fully functioning version of the network can become implemented. According to Investopedia, the network also still has to address several security concerns before launching it. However, the Lightning Network is one of the most promising solutions to a network that rapidly becoming more crowded as investors flock to be part of the crypto gold rush.