The Lightning Network could be a driving force to push the value of bitcoin to new record heights. In order to make this happen this second layer network needs to improve, obviously. But a lot of development is already happening on the Lightning Network. However, it needs to be stable, and it needs to be able to deal with lots of traffic in all kinds of sizes. If these basic criteria are met, the Lightning Network could give bitcoin a spark and send it on a rocket to the moon.
What is the Lightning Network?
The Lightning Network is a second layer on top of the Bitcoin blockchain. In this case we are talking about the Bitcoin network, but technically the Lightning Network can run on top of any blockchain. It’s a payment protocol for fast transactions between participating nodes. Many developer believe the Lightning Network to be a solution for the scaling problems that Bitcoin is facing.
What the Lightning Network does, is creating a temporarily communication channel between two parties. Here these two parties can make as many transactions as they want. Only after closing the channel, the nodes can communicate the outcome of these transactions to the Bitcoin network. As a result a transaction on the Lightning Network only needs to cost a fraction of a cent.
How can we use the Lightning Network?
The reason why the Lightning Network is being developed in the first place, is to allow cheaper transactions to take place. On the Bitcoin network a transaction could cost a dollar, which is too much when you’re buying a cup of coffee. Currently it already makes a lot of sense to use the Lightning Network for smaller payments, even though the network is still under heavy development.
However, there are other ways to use the Lightning Network as well. As I said earlier, the network is a layer on top of an existing blockchain. Lightning Network is mainly being developed for Bitcoin, but it can also run on other chains like Stellar, Litecoin, Zcash and Ethereum. Developers have already been testing atomic swaps, allowing transactions from bitcoin directly into litecoin or other currencies. These would make cryptocurrency payments even easier, both in physical stores and in web shops.
In addition a Dutch developer called Joost Jagers has been working on an messaging application called Whatsat. This messaging app is completely build on top of the Lightning Network and allows people to transfer messages. These messages are end-to-end encrypted, routed over the TOR network, peer-to-peer, censorship-resistant, without any company or government playing Big Brother.
Even though the current version of the Lightning Network allows such communication to be free, it’s unlikely it will stay like this. That’s why Jager created a paid version of Whatsat. Here people need to pay 0.3 satoshi per message, giving a small fee to the nodes carrying the data. At the current rate that would be $0.00003 per message. If someone would send 90 messages per day, the messaging app would cost 1 dollar per year.
Developers working on Lightning Apps
Atomic swaps and messaging apps aren’t the only developments on the Lightning Network. There’s a whole community developing apps! These are so-called Lightning Apps, or LApps. There’s a great variety of them available, allowing users of the Lightning Network to do all kinds of things:
- LNCast — a podcast platform where people can subscribe to a podcast using the Lightning Network
- Y’alls — A writing platform where writers are ‘paid’ for their work use micro-transactions on Lightning.
- Lightning App — a mobile and desktop wallet
- Intxbot — A Lightning-powered advertisement bot on Telegram
- Breez — non-custodial wallet for iOS and Android
- Bottle Pay — Bitcoin LN payments everywhere, also through your social media
- Sats4likes — earn some satoshi for liking and retweeting on Twitter.
- LN Pizza — using Lightning to buy pizza and Domino’s
- Satoshi’s Games — There’s even a whole lot of games available
- Lightnite — An upcoming battle royale game even pays gamers when they shoot an enemy, and you lose money when you’re being hit.
Five years from now
It’s still very early, but the Lightning Network is under heavy development. As soon as this second layer protocol is working properly, Bitcoin will suddenly become a lot more useful in our every day lives. For now Bitcoin is still the gold among the cryptocurrencies. Many people want it, but only a few are actually using it. The Lightning Network can change that.
Investor Tim Draper has big hopes for bitcoin, mainly driven by the Lightning Network. He believes one bitcoin will be 250 thousand dollars within the next four years. Bitcoin payment processors would be the cause of this. Now it’s important to know that Draper is an investor into OpenNode, a bitcoin payment processor.
“It’s because of Lightning Network and OpenNode and maybe others that are allowing us to spend Bitcoin very freely and quickly, so that it’s not just a store of value but it can be used for micropayments; it can be used for retail, it can be used all over.”
Tim Draper at Malta AI & Blockchain Summit (reported by CoinTelegraph)
Just give this a thought: the concept of Lightning nodes or blockchains in general can replace the internet as we know it. Instead of paying an ISP for our subscription, we can request information and pay for that information directly. The internet is now build on advertisement, and some innovative companies are already moving away from that concept, for example Brave. The Lightning Network and its nodes could take another step, and could allow for a super fast and cheap way to request, share, and pay for information.
But we are not there yet, that’s clear. The Lightning Network is far from finished. Currently bitcoin is six months away from its next halving, while the bitcoin price is still far below its all-time high. However, developers continue to innovate. New proposals could improve Bitcoin’s privacy, while others discover new ways to use the Lightning Network. These creative minds surprise me almost every day, that’s why I enjoy this community so much.
Originally published at NEDEROB.