Lightning Network has been experiencing steady growth since its inception couple of months ago – it is now, according to this LN statistics tracker, at almost 2000 active nodes and over 6500 channels with a total capacity of $150k,
In simple terms, Lightning works by starting an off chain channels between different network participants. Batches of transactions are grouped together and then added to the blockchain in one large group. The bitcoins are held in the meantime and can’t be spent elsewhere.
Speaking at Consensus 2018, one of the LN software engineers told us that each channel can process about 500 transactions per second. With thousands of channels being utilized at once, Bitcoin could in theory scale beyond not only any other cryptocurrencies but any other payment method, including the hallmark of fast processing – VISA.
Lightning’s credibility has already been boosted with it recognition from companies including Microsoft, which in February championed layered Bitcoin scaling solutions.
One of popular LN proponents is Yalls.org creator Alex Bosworth, who showed us the evidence of the savings possible when using LN to make sales in comparison to the same transaction done using a credit card.
In Bosworth’s case, a 2.9% charge, $0.30 in fees and a $0.50 minimum processing fee look very steep compared with Lightning, which as can be used de facto for free and enables sending amounts less than a satoshi (one hundred millionth of a bitcoin and the smallest possible unit that can be used on-chain).
Selling online with credit cards (+2.9%, $0.30 fees, $0.50 minimum charge) vs selling with Lightning (0%, $0.00 fees, 1 sat minimum charge) pic.twitter.com/FYEkIC1TL5
— Alex Bosworth ☇ (@alexbosworth) May 17, 2018
Back in April, LN CEO Elisabeth Stark stated she will work on shifting the narrative in the industry back from “blockchain to bitcoin”
“When we first pitched… Lightning Labs, we actually took the word ‘Bitcoin’ out of our deck and our marketing material because it was so much about blockchain,” she told Yahoo! Finance.
Applications that run on top of Lightning Network are already queuing up.
In the short-term, we expect the first firms that will process transactions on the Lightning network. There is one startup from San Francisco, that plans to sell ice cream in the city, but will only accept Bitcoin payments via Lightning network. Given the cost of the ice cream, the risk here is certainly manageable.
The implementation of atomic swaps is also planned for the future. You could theoretically send bitcoins to someone and he would receive other coins, all done via LN with no effort by the sender or receiver.
LN centralization problem
Hubs, or routing nodes, will have to emerge in order to facilitate the connectivity of large number of individuals in Lightning Network. However, like any proper decentralized system, users will have a freedom of choice and would be able to connect to different routing nodes. As Lightning Network grows, different entities would provide this type of routing service for a competitive transaction fee.
Unlike ISPs (that have to reside in close proximity to users) or banks (that are bound by regulatory requirements and restrictions), there is no limit to the potential number of these routing service providers in Lightning Network. Censorship resistance then becomes a quality of service issue. A provider that won’t work or behave properly will simply lose its customers.
BTW, technically, in LN, only one hop is known to a node involved in a transaction, so IMHO, this is not a serious argument.
Mobile Lightning Wallet
Rawtx’s application is now available on the Android platform, and you can download the wallet through Google’s Play Store. With the app, users can send or receive testnet bitcoins on the Bitcoin blockchain through the existing Lightning infrastructure. This is the second mobile wallet available for LN, the first one was Eclair, released by technology startup ACINQ.
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