Lightning Bitcoin — new leap in Bitcoin development
Lightning Bitcoin — a new fork of Bitcoin blockchain launched on 19th December 2017 and is going live on February, 4th 2018. Here’s a short explanation of what LBTC is trying to ahieve.
What’s wrong with Bitcoin:
Bitcoin has faced several significant problems. Increasing centralization represented by computing power accumulated in hands of a few large mining pools is undermining the original idea of self-sufficient and self-contained distributed payment. Days of self-evaluating system where any individual on any computer performed validation of transactions passed long ago. This creates a huge gap between the large community and those few, who ultimately make decisions on the direction of the project, raising questions of reliability of Bitcoin itself. Nevertheless, the technology is so promising and perspective, that it keeps bringing thousands of new users and institutions every month, pushing Bitcoin price from $3000 up to $20,000 in three months. Such popularity, combined with very limited processing capabilities, brought vast increase in transaction costs and validation speed.
Bitcoin protocol implements 1MB block size, and therefore allows verifying only 7 transaction per second with a very limited throughput, which made transaction fees soar surpassing $20, by far exceeding average transaction size. To compare, Visa runs 4000 transactions per second and PayPal — 115tps. This makes it impossible to use and exchange Bitcoin on everyday basis and prevents mainstream adoption, acknowledgement as a valid payment system and bounds Bitcoin in terms of speculative tool. High volatility combined with abovementioned, leads to conclusion that Bitcoin has failed to realize the original idea — to be a establishment free, global, inexpensive value exchange system, which would bring higher degree of freedom, transparency, include regions that are now excluded from global economic system and ultimately shift power towards individuals.
Previous attempts:
Several attempts have been already made to solve these problems, which ended up in hard fork saga. Handful of new chains forked from the original Bitcoin chain, each solving particular problems of the original system. Developers of BitcoinCash (BTH), who expanded block size to 8MB and introduced immediate difficulty adjustment algorithm, made first attempt. Expanded block size does improve scalability today, however it doesn’t seem reliable in a long-term perspective. What should be done when this threshold is reached? Is an increase in block size a definite solution, or we are just postponing the problem? Moreover, centralization issue is still there, Bitcoin Cash mining process allows to use ASICs and encourages miners gathering in large pools.
Another way-out was introduced by Bitcoin Gold (BTG), where a new mining algorithm — Equihash — was implemented, limiting mining hardware to GPUs, allowing lower entry point. All in all, previous forks are still based on Proof-of-Work consensus algorithm, which after all is energy consuming, and later was surpassed by new, more progressive consensus algorithms such as Proof-of-Stake, DPoS. We think that each of these adjustments are just temporary fixes, rather than durable solutions.
LBTC solution:
A new hard fork of Bitcoin blockchain — Lightning Bitcoin (LBTC) adopts DPoS consensus mechanism (Delegated Proof-of-Stake), created by Dan Larimer of BitShares and BlockOne, which “has proven robust, secure, and efficient by years of reliable operation on multiple blockchains.” It eliminates the negative effects of centralization posed by the PoW algorithm, ensures maximization of shareholders profitability and the network effect and minimizes the costs of maintaining the network.
In short, concept mainly relies on stakeholders voting for delegatess, which in their turn produce blocks in a fixed schedule. Scheduling and constant reelection of delegates allows keeping all the voting power in hands of stakeholders and disrupts 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 proposals, thus avoiding forking and market separation. Delegates are given the ability to propose changes to the system. This may bring the question of centralization, as if power was simply shifted from miners into delegates’ hands. But DPoS protocol resolves this by giving shareholders rights not only to elect and reelect delegates, but also approve or reject 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 comes with great advantages such as: comparable to Visa number of tps — 1000 to 10 000, 3s block interval (Bitcoin – 10 min), verification speed averaging at 1.5s, 2MB 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.
Lightning Bitcoin has just finished its wallet and network testing and is going live on February, 4th. This is just a first step in large development plans, including smart contract deployment, building DApps and crosschain atomic swaps.
You can learn more about it on:
lbtc.io
Twitter: Lightning Bitcoin [LBTC]
Telegram: t.me/LightningBTC
