Lightning Network could save bitcoin’s blushes
by FRANK ELEANYA
January 26, 2018 | 11:25 am| | | Start Conversation
Driven largely by negative reports on price depreciation, bitcoin is one of Google’s most searched items with over 140 million searches per 0.50 seconds in January, 2018. Among its harshest critics have been those who are at variance with its usability.
Bitcoin’s usability has been a critical question for most users of the cryptocurrency. In the true sense, it has also prevented it from attaining Satoshi Natomoto’s primary vision of ushering a new era of economic enlightenment greased with fast, secure and inexpensive means of making payments without using the traditional financial system.
For one, the design of the bitcoin network makes it unable to handle three to seven transactions per second. For instance, if one thousand people from different parts of the world were to send money through bitcoin, their transactions might take days to complete. Compare that to an older service like Visa which is able to process tens of thousands per second, it becomes clear why many are reluctant to put bitcoin to everyday use.
Apart from long delays in transactions, fees charged have become very exorbitant to the point of prohibitive. Users pay fee fees to assure that the global network computers that manage the currency will process the transaction.
As at 2017, transaction fees on bitcoin exchanges have increased from less than $1 to as much as $28 on every $100 transaction. Transaction fees have also become the highest bidders gets the fastest service. For instance, paying a small fee of $3 could leave one’s transaction pending for almost 24 hours. Whereas, you could get the same service in 10 minutes if you were to pay $19 at least. Bitcoin’s transaction fees are so high because the peer-to-peer network that powers the currency has very limited capacity by the standards of modern digital infrastructure.
In recent times, the high fees and slow transactions have fuelled the debate whether bitcoin should be restricted as just an asset class or be classified as an asset and at the same as a currency.
In a bid to resolve these challenges, the Lightning Network or LN was created. The LN refers to a system that can be grafted onto a cryptocurrency’s blockchain. It is a proposed system built on top of bitcoin that would let people instantaneously send and receive payments as well as reduce transaction fees by keeping them off the main network.
LN was designed in 2014 by two bitcoin engineers called known as Poon and Thaddeaus Dryja. Normal use of a Lightning Network requires opening a payment channel by committing a funding transaction to the relevant blockchain, followed by making any number of Lightning transactions that update the tentative distribution of the channel’s funds without broadcasting to the blockchain, followed by closing the payment channel by broadcasting the final version of the transaction to distribute the channel’s funds.
Since the Lightning Paper was released by Poon and Dryja in 2014, several engineers have tried to turn the ideas in the paper into a working code. Many of them have since described the early prototypes and further advanced prototypes of LN as capable of fulfilling the vision of Nakamoto for bitcoin. Potentially, one LN transaction is 18,000 times cheaper than a bitcoin cash transaction.
On December 6, 2017, three teams of engineers released a 1.0 version. The version has hosted it first successful payments, with developers spending bitcoin to purchase articles on a micropayment blogging site built for demonstration purposes by Alex Bosworth, a programmer.
“We tested éclair (ACINQ), c-lightning (Blockstream), and Ind (Lightning Labs). We spun nodes distributed around the world, including Asia, Europe, South America, and North America. For our first test, we used the coffee shop Starblocks as our example éclair application. It accepted an incoming payment in bitcoin from a customer paying with the Ind Lightning app as the client, and was routed through c-lightning,” the team noted in a blog post.
Presently, bitcoin users can test LN functionality on the bitcoin testnet. However, the technology has to undergo some more hurdles before becoming production ready.
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