Bitcoin Global News (BGN)
March 23, 2018 -- ADVFN Crypto NewsWire -- On March 16th, Lightning
Labs announced the first real-world implementation of the Lightning
Network, putting Bitcoin in the race with Bitcoin Cash, Dash,
Ethereum, Litecoin, Ripple, Stellar, Zcash, and others to become
the cryptocurrency of choice for small everyday purchases.
Developers and investors see the beta launch of the first
thoroughly tested version of lightning network technology as the
true beginning of the two-layer payments network, a crucial step
towards building the healthy transactions-focused Bitcoin network
of the future.
Bitcoin transaction fees are now at the somewhat ridiculous
level of $30 each. The lightning network creates a layer on top of
the Bitcoin blockchain intended to run fast and cheap bitcoin
transactions, which then settle back to the Bitcoin blockchain.
There are no miners on the lightning network, so transaction
processing is free or very cheap.
The buyer and the seller set up a 'multisig wallet' requiring
more than one signature to clear a transaction. The wallet holds
some set amount of bitcoin with an address saved to the blockchain.
The two parties now have a payment channel through which they can
run an unlimited number of transactions off of the blockchain. Each
transaction requires both parties to sign an updated balance sheet
showing how much of the bitcoin stored in the wallet belongs to
each. When the two parties are finished doing business, they close
the channel and the resulting balance is registered on the
blockchain. This all happens automatically in the background and is
not anywhere near as cumbersome as it sounds.
The Lightning Network’s payment channels allow users to transact
with each other directly rather than broadcasting their business to
the entire public blockchain. By tracking their payments between
each other on their own, the two parties avoid expensive and
time-consuming interactions with the blockchain.
Lightning network users don't need to open new payment channel
for every new party with which they want to transact. They are
indirectly connected to other parties using multiple hops between
other users on the network. Everyone is connected to everyone else
through the network via only a few “nodes” on the network. By
creating a network of two-party ledger entries, it is possible to
find a path across the network similar to routing packets on the
internet, where lightning network nodes function as the servers
that process transactions in a decentralized manner.
Lightning network payment speed is measured in milliseconds to
seconds, with billions of transactions per second possible across
the whole network, blowing away Bitcoin's legacy payment system
capacity by many orders of magnitude.
Bitcoin has continued to succeed in spite of high transaction
fees because most people would simply prefer to use the more
familiar bitcoin as money over an altcoin. The lightning network
may help Bitcoin essentially kill off altcoins focused on cheap
transactions. Though lightning network implementations are now
being developed for a range of cryptocurrencies besides Bitcoin,
the dominance of Bitcoin as a cryptocurrency may, in the end, be
enough to give it the win as cryptocurrency of choice for small
everyday purchases.
By: BGN Editorial Staff