Lightning Bitcoin: Just what Bitcoin should be like

Lightning Bitcoin (LBTC) is a hard fork of the Bitcoin blockchain, forked at Block 499,999 by the Lightning Team. It adopts the DPOS consensus mechanism, thereby solving the problem of miner centralization and network congestion prevalent in Bitcoin. Lighting bitcoin is an important part of the Bitcoin experiment.

LBTC adopts a DPOS (Delegated-Proof-of-Stake) consensus mechanism instead of PoW (Proof-of-Woork) and has a 2 MB block size. It can increase transaction speed, promote decentralization, and supports smart contracts, thereby combining the advantages of Bitcoin and EOS, creating a valuable and functional crypto coin. The name Lightning Bitcoin (LBTC) is derived from its lighting fast transaction speed. Leveraging the above advantages, LBTC can serve as a platform with greater capabilities. Team believes it is a very promising project, and will prove to be a turning point in the history of blockchain development.

You may be wondering why article headline puts LBTC as “What Bitcoin Should be Really Like”. It’s not due to any lack of humility. You will have a better idea once you review the history and current status of Bitcoin, explained in the following section.

It has been almost 9 years since Bitcoin was launched in 2009. Since then, cryptocurrencies and blockchain technology in general have evolved dramatically, and made a long way from being an innovative idea to entering mainstream markets and generating billions of dollars. Bitcoin has marked the beginning of a new era in storing and transmitting information and value, and has completely redefined our way of thinking not only from an economic perspective, but also from a sociological point of view, giving rise to different questions on power and control over value distribution.

It opened new possibilities for underdeveloped financial regions that were overburdened by excessively high fees charged by monopolistic money transfer operators (MTOs). MTOs such as Western Union charge as much as 39% commission in Ghana for international transfers and 24% commission in Tanzania, while in comparison, BitPesa — a digital currency from Kenya, charges only 3%. Bitcoin created a new way to protect privacy, and a way to avoid government constraints, fostering new financial independence. In Venezuela for example, US-imposed sanctions made it difficult to conduct international money transfers, therefore forcing many tech-savvy consumers to turn to Bitcoin. Moreover, the transparency in blockchain transactions helps promote anti-corruption measures. Statistical reports prove that corrupt governments tend to apply obstructive laws or have completely banned Bitcoin.

Since the time Bitcoin was created, hundreds of blockchain projects have emerged, each solving different problems and catering different markets. In particular, the maturity of Ethereum, has ensured rapid growth in the global use of blockchain. In future, blockchain technology will be used extensively in fields such as finance, credit information, ownership management, investment management, Internet of Things and supply chain. Despite the rapid technological development, 9 years is relatively a very short time for new technology development. Therefore, constant rethinking and upgrade is crucial for further technological expansion and improvement.

Main problems Bitcoin faces

Bitcoin has been highly successful in entering the mainstream market, due to which global interest in crypto-technologies has increased manifold. However, it also faces several significant problems. Increasing centralisation due to computing power concentrated in the hands of a few large mining pools, is undermining the original idea of a self-sufficient and self-contained decentralised payment system proposed by Satoshi Nakamoto. Days of a self-evaluating system where any individual on any computer could validate transactions has passed long ago. This has created huge differences between the large mining community and the core team that ultimately decides the project’s direction, raising questions on the viability of Bitcoin itself.

Problems Bitcoin Faces Today

Nevertheless, the technology is so promising and has such great potential, that it keeps bringing thousands of new users and organizations into its network every month, pushing Bitcoin’s price from US$3,000 up to US$17,000 in just three months. This rapid price increase, along with very limited processing capabilities, have vastly increased transaction costs and validation speed.

The Bitcoin protocol implements a 1 MB block size, due to which only 7 transactions can be verified per second, and there is very limited throughput. This has led to transaction costs soaring over US$20, far exceeding the average transaction size. In comparison, the Visa network processes 4,000 transactions per second (tps), while PayPal processes 115 tps. This has made it impractical to use and trade Bitcoin on a daily basis, and has hindered its mainstream adoption as an effective payment system, limiting its development to a speculative tool or investment instrument. On the whole, the high volatility of Bitcoin’s price along with the abovementioned issues has led to the conclusion that Bitcoin has failed to realize its original goal — to be an establishment-free, global, inexpensive value exchange system, which would bring a higher degree of freedom and transparency, including in regions that are now excluded from the global economic system, ultimately shifting the power to individuals.

Therefore, there is an urgent need to find a solution for the problems of network congestion, miner centralization and high transaction costs. In fact several attempts have been already made to solve these problems, which have ended up in hard forks. There are a handful of new chains that were forked from the original Bitcoin chain, each solving a particular problem of the original system. The developers of Bitcoin Cash (BCH) were the first to do so, as they expanded the block size to 8 MB and introduced a new Difficulty Adjustment Algorithm (DAA).

Increasing the block size does improve scalability, but it does not seem to be reliable in the long run. What should we do when this threshold is reached? Is an increase in block size a definite solution, or are we just postponing the problem? Moreover, the issue of centralization still remains. The Bitcoin Cash mining process allows the use of ASICs and encourages miners to gather in large pools. Bitcoin Gold (BTG) came up with a different solution, and implemented a new mining algorithm — Equihash, limiting mining hardware to GPUs, thereby reducing the entry threshold. But the result is the same, limiting mining hardware to GPUs cannot solve the network congestion and centralization problem. Overall, earlier forks are still based on the Proof-of-Work consensus algorithm, which is energy consuming, and was later improved upon by new, more progressive consensus algorithms such as Proof-of-Stake and DPOS. These adjustments by the earlier forks are just temporary fixes, rather than sustainable solutions.

Lightning Bitcoin Features. LBTC BTC BCH BTG SBTC BCD

The new hard fork of Bitcoin blockchain — Lightning Bitcoin (LBTC) adopts the DPOS (Delegated Proof-of-Stake) consensus mechanism, created by Daniel Larimer, the serial entrepreneur behind BitShares and EOS. The DPOS mechanism has proven to be robust, secure, and efficient after being reliably used in multiple blockchains. It eliminates the negative impact of centralisation in the PoW algorithm, ensures maximisation of stakeholder profitability and the network effect, and minimises the cost of maintaining the network.

101 Lightning nodes

Looking back at the past and the present status of Bitcoin, we seem to have moved from the “one CPU one vote” civilised world envisioned by Satoshi Nakamoto, to a primitive world of brute force. The DPOS consensus mechanism seems to be to the best choice to reinstate the rights of token holders. The DPOS consensus mechanism enables each person holding an LBTC token to vote and decide who will be the authorized nodes for the entire system. At most, 101 delegates who have received the most votes, will have the right to forge blocks and record the transactions. This can be understood as 101 forging pools, and each forging pool’s rights are the same. Stakeholders who hold LBTC can vote at any time to replace the authorized nodes (forging pool). If there is instability in the forging process, the computer crashes, or a delegate tries to misuse his/her authority, then they will be voted out by the stakeholders, and backup nodes can replace them immediately. In one way, DPOS has a parliamentary system like that of the United States, except that instead of having elections every four years, elections are always going on. The Proof-of-Work consensus mechanism is far from the original intention of the “one CPU one vote”. DPOS not only thoroughly implements the original intention of Satoshi Nakamoto, but can also make Bitcoin a free, global, value exchange system with low transaction cost.

In short, the concept mainly relies on stakeholders voting for witnesses, who in turn produce blocks on a fixed schedule. Scheduling and constant reelection of witnesses ensures that all the voting power is in the hands of stakeholders, and does not permit any interference. Moreover, it brings the possibility to dynamically adjust system parameters like transaction fees, block size and intervals, throughout the lifespan of the system via voting for delegates, thus avoiding forking and market segregation. A delegate is a special type of account that has the privilege to propose changes to the system. This may bring the question of centralization by simply shifting the power from the hands of miners into the hands of delegates. However, the DPOS protocol resolves this by giving stakeholders the rights to not only elect and reelect delegates, but to also approve their proposals. According to Dan Larimer, “This design was chosen to ensure that delegates technically have no direct power and that all changes to the network parameters are ultimately approved by the stakeholders.”

Delegated Proof-of-Stake has tremendous advantages, such as a tps comparable to Visa — 1000 to 10000, 3s block interval (Bitcoin — 10 min), average verification speed of 1s, and a 2 MB block size, which can be adjusted in the future through voting. This enables unlimited scalability and stability of the system, possibility of everyday use, and makes Lightning Bitcoin a solid alternative to existing financial systems.

One other thing to note is that the Lightning Network and Lightning Bitcoin are two different things, and Lightning Bitcoin does not support SegWit Address. The Lightning Network is a second-tier payment protocol that operates on top of a Bitcoin blockchain. It enables instant transactions between participating nodes and has been touted as a solution to the Bitcoin scalability problem. Many people believe that there will be a big problem of centralization in the Lightning Network, and that it will be highly centralized when it eventually rolls out. You can review some related the articles on the Internet about this. Lightning Bitcoin is a fork of Bitcoin, and it is completely different from the Lightning Network; the only similarity between the two is that they are both trying to solve Bitcoin’s congestion problem, however, Lightning Bitcoin using the DPOS consensus mechanism can dramatically improve speed and ensure Bitcoin is decentralized.

Please note, the snapshot of the blockchain was taken on December 18th. Since then only futures were traded on certain exchanges, as the main network hadn’t been launched and actual transactions were not possible. From then until now, developers have been testing the system and working on the final implementation of the official wallet, and are establishing new partnerships. The project has gained substantial traction during this time, especially after the announcement about the cooperation with Stan Larimer, the founder of BitShares, which resulted in a stunning 100% price increase in one day.

The Lightning Bitcoin team have members from the Ripple project, the current code is open source, the main network has been launched and is stable, and transactions are forgings are running smoothly. The Lightning Bitcoin team has strong technical capabilities, and is also working hard to build a community like Bitcoin. The team has a lot of belief and trust on the project’s success, and have already achieved a lot. At present, the community have done several things, such as developed the new light wallet, created a tutorial on forging Lightning Bitcoin, and developed community pools. As for the official development plan, more talents will be invited to join the team and a DPOS lab, which will be established in the United States. The lab will focus on the underlying technology of EOS and develop it further.

LBTC will also implement smart contracts — self-executing contracts that contain mutually agreed conditions, and ensure that the parties to the contract fulfill their obligations, or else the contract’s execution is aborted. Smart contracts eliminate the need for third parties to secure standard contracts, mitigates risk, which comes with the necessity to trust blindly, and generally increases transaction speed and reduces cost. With smart contracts Lightning Bitcoin will enable users to create and distribute their own assets and create projects based on LBTC, making it a blockchain platform with much greater capabilities than the original Bitcoin. It will also support DApp development and cross-chain atomic swaps, adding even more usability and enhancing system infrastructure.

After Lightning Bitcoin develops smart contracts, it will build its own ecosystem and increase Lightning Bitcoin circulation. In general, Lightning Bitcoin will make an attempt to merge the best of Bitcoin and EOS, breaking the boundaries of cryptocurrency, and broadening the horizon of its real-life applications.