The Lightning Network is regarded by many as Bitcoin’s best chance at salvaging its current scalability issues. Since early 2016, Bitcoin network congestion has caused delayed transaction and ridiculous fees. These problems were exasperated in 2017 as the entire cryptomarket underwent explosive growth. In an effort to regain BTC’s original status as an easy to use digital currency, this off-chain protocol was developed.
How the Lightning Network Works
The Lightning Network utilizes off-chain payment channels to reduce the amount of congestion on the BTC blockchain. Users are able to open up these personal payment channels and send/receive unlimited transactions. Only once the portal has been closed, do the transactions get applied to the blockchain. The LN allows BTC users to enjoy the low fees and instant transfers that helped this crypto rise to fame in the first place.
The Lightning Network has already begun its Beta testing stage and developers are confident in their abilities to iron out any technical difficulties prior to the official release date, which has not been announced. Even though the LN is still only in Beta testing, there has been considerable adoption and development by third-parties.
There was even a point in January where the number of active LN nodes briefly outnumbered the number of active Bitcoin Cash nodes. This situation has since changed, as BCH has regained lost ground thanks to a hard-fork this month that also drove BCH prices up significantly.
BTC Smart Contracts – Yes
You may not think of BTC when discussing Smart Contracts but the LN seeks to change all of that by bringing this helpful feature to the world’s original cryptocurrency. Smart contracts are predefined protocols that live on a blockchain. They are automatically executed upon the completion of predetermined factors and they are considered by many in the cryptocommunity as one of the biggest developments ever contributed to the sector.
The LN would allow for the use of Smart Contracts on the BTC network and this is having a resounding effect throughout the entire market. Developers are already hopping on the bandwagon in hopes of utilizing the new functionality to improve users overall experience.
The prestigious university, MIT, has been especially interested in this technology and how it can be combined with “Oracles” to create fully autonomous BTC Smart Contracts. Oracles can be used to monitor outside factors such as weather or stock prices. Once a predefined action has occurred, the Oracle will automatically send Satoshis to the Smart Contract to initiate the execution of the Smart Contract protocol.
This technology could be especially useful when discussing BTC futures. A predefined price point could be programmed and once that value had been achieved, the profits could be automatically calculated and distributed via smart contract.
The New Face of BTC
Bitcoin has seen some notable upgrades since it was first introduced to the world nine years prior. Today, developers are making a concerted effort to expand the capabilities of BTC and restore its previous low-cost structure. The Lightning Network seems to be the perfect answer to these questions and hopefully, in the future, there will be even more effort put towards expanding BTC’s functionality in the marketplace.
What do you guys think? Is the Lightning Network the answer to BTC’s woes?
By D. Hamilton, BIG Writer