We’ve briefly covered the other uses of the Blockchain in past articles, but it seems like the interest in the system showcased by banks and other monetary institutions is still growing. Today, we are going to talk about lighting networks, which are considered an important innovation in the Bitcoin space, as it would allow the platform to process transactions at a much higher rate, while also being more efficient and requiring a lower cost.
Developers Joseph Poon and Thaddeus Dryja came up with an interesting idea in February. Their plan of a Bitcoin lighting network consists of transactions taking place on micropayment channels, which are off the chain, only to be processed by the blockchain once the final settlement is obtained. By implementing such a system, according to its developers, Bitcoin scalability would become a thing, while efficient micropayments and instant transactions will seem more feasible.
Why is implementing such a problem essential for the future of the digital currency? Well, as it continues growing and gaining momentum, Bitcoin will eventually be used by a larger number of people, which means that a significantly bigger number of transactions will be taking place. To put things better into perspective, Visa has achieved a total of 47,000 transactions per second during the 2013 winter holidays and currently averages millions of transactions per day. Such numbers are impossible judging by the current state of the blockchain system, as bitcoin supports less than 7 transactions each second, each of these with a 1 megabyte block limit. By lifting this limit and implementing a system similar to the one which has been outlined before, the number of possible transactions alongside with the wait time for each transaction in particular will be improved.
Bitcoin core developer Gavin Andresen warned that: “As we get closer and closer to the limit, bad things start to happen. Networks close to capacity get congested and unreliable. If you want reliability, you’ll have to start paying higher and higher fees on transactions, and there will be a point where fees get high enough that people stop using Bitcoin.”
Most of us wish to stay away from the Bitcoin XT alternative which has 8 megabyte blocks because of the large block size limit increase and other faults that the system has, so it’s important to work directly on the one which we’re using, and come up with a feasible solution as soon as possible, to avoid problems in the future, once the bitcoin network grows over its limit.
The implementation of the system described above and of other lighting networks would require a couple of tweaks to be made on the Bitcoin core. These are possible and shouldn’t take too long to be made; therefore the Bitcoin community should express their thoughts soon, so that work can get started.
Based on everything that has been outlined so far, what do you think about the lack of action in this regard? Let us know your thoughts in the comment section below.