The Transaction Potential of the Lightning Network
Just before Christmas of 2017, Bitcoin transaction fees skyrocketed to nearly $35 USD per transaction. Three months later, the median transaction fee is approximately $1.44 USD. A highly volatile increase in transaction costs leave cryptocurrency investors looking for other options in terms of transaction costs (and speed). Many different solutions have been proposed to solve this issue, and some are already in development. One in particular is called the Lightning Network.
What is the Lightning Network?
The Lightning Network is a system powered by blockchain smart contracts that allows for instant, low cost payments directly between two parties independent of third party custodians.
https://www.youtube.com/watch?v=rrr_zPmEiME
The Lightning Network, in theory, has real benefits for users over the current Bitcoin transaction process. The authors of the original Lightning Network white paper believed that the fees involved in utilizing the Lightning Network, once established, would be significantly less and payments would be validated far quicker than traditional Bitcoin transactions (currently ~10 mins).
How long will it be before the Lightning Network is a reality? It kind of already is. As of March 17, 2018, test-net implementations of Lightning already had over 1550 nodes and 3554 channels. While still in the testing phase, people are already transacting Bitcoin over the main-net, against the cautions of its developers. TorGuard has announced that it would be accepting Lightning payments, Blockstream is testing integrations, and, according to a Lightning main-net explorer, more than $33,000 in Bitcoin may already have been transacted via the Lightning Network.
Alex Bosworth, a Lightning developer, stated, “[a] lot of people want to get on main-net and it’s hard to tell them that it’s not quite ready and that they should test on test-net. I wouldn’t recommend using main-net, unless you are explicitly testing and fully know what you are doing.” Use of the Lightning Network has resulted in the uncovering of dozens of bugs and usability issues. Some developers lost their BTC.
For now, new users are advised to wait and be patient while development continues to mature. Please tell us below what you think about the Lightning Network’s potential!
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