Bitcoin believers and skeptics alike have been waiting for “Lighting Network” which is said to solve the scalability problem of Bitcoin. The network would use an off-chain protocol and is currently under development. The first public alpha release was made on 10 January 2017 and although it promises to solve the scalability problem of Bitcoin many experts believe that it will create a lot more problems that will be unable to solve.
What is “Lighting Network” and why do we need it?
Lighting Network is the proposed solution to the traditional blockchain tech which is used to maintain all the transactions of Bitcoin among its users. Bitcoin cannot provide high-speed transitions like its rival currencies like Ethereum or Ripple. The current transaction fee is directly proportional to the network congestion and is extremely high with sometimes peaking at $30 for a transaction.
Lighting network is supposed to solve these problems. It is a protocol allowing for a series of off-chain bidirectional payment channels. Users can open a channel (node) between themselves for transfer of Bitcoin that is from one to another. The advantage is the two people using a node can transfer money instantaneously without any waiting period and transaction fees.
So what is the problem?
The Lightning Network is primarily meant for smaller transactions and they won’t be broadcasted like the current network. The increase in the number of users means the dependability and the security of the network will decrease. The transfer of money happens between two nodes and the origin of the money is not known. Developers have suggested amendments like implementing a signature which will verify the source.
Since smaller payments will be routed through the correct nodes for faster payments, pre-funding of the route will be required and people will choose to keep a low balance and top it up only when required.
So what does it mean?
Jason Tharian, a blockchain developer from Copenhagen, says,
“It doesn’t change anything, problems are there with every solution, you don’t just do nothing and give up. There are problems with the current Lightning’s tech but there are solutions as well and it will be fixed in the future.”
Henry Jackson, a Financial Advisor from Toronto, says,
“If you read through the ‘problems’ in the Lightning network, I’m sure 95% of the investors wouldn’t even understand the tech, which means the issue of funding the routes and network would not arise. Majority of the investments are done through huge exchanges who would follow standard network procedure. I think people are fussing over nothing, Lightning is a positive change, scalability will improve and Bitcoin will improve”
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