Bitcoin developers and users alike have been looking for a solution to the ongoing problems that have resulted from the rapidly growing interest and demand for the cryptocurrency. August 24, 2017 was seen as a big day for Bitcoin; it was on this day that SegWit was implemented on the Bitcoin network. SegWit is a protocol which will allow the Bitcoin network to expand in order to accommodate surging customer and transaction interest. But so far, SegWit hasn’t been widely adopted and hasn’t made much of an impact. Now, the focus is on a “Lightning Network,” which some developers have suggested could be a revolutionary change for the network. The lightning network is currently in the early stages although it is available for live public tests. It is expected to move toward becoming enterprise-grade in the upcoming months. Here’s a little more about what it is and what the changes might mean.
A “Game-Changing Innovation”
The Lightning Network would potentially allow for transactions and microtransactions utilizing Bitcoin to take place instantaneously. According to CNBC, Aurélien Menant, the founder and CEO of cryptocurrency exchange Gatecoin, described the network as “a game-changing innovation,” saying that it “utilizes smart contract technologies to enable instant micropayments using cryptocurrencies such as Bitcoin.”
Analysts view the lock-in and implementation of the SegWit protocol as an essential step toward the implementation of the Lightning Network, which would constitute a sort of added layer of framework which could be grafted on to the existing Bitcoin network. Fran Strajnar, co-founder and CEO of Brave New Coin, explained that “Bitcoin’s SegWit means the many well-financed companies researching Lightning solutions can start to test on the main network,” possibly allowing the implementation of the Network to take place in the near future.
Years of Anticipation
Companies and developers alike have been waiting for the implementation of Lightning for more than two years. The technology behind the Lightning Network will improve upon the process by which Bitcoin transactions are validated. Currently, the process makes use of mining rigs, requiring that computers solve complicated math problems before the transactions can be recorded on the blockchain ledger. Because of the computing power required, a single transaction can take up to an hour to confirm. With Lightning, however, this process would be significantly sped up. The Lightning Network would require that participants agree to transact on a separate, offline channel, and then the blockchain would update to reflect the external transaction. Thus, the middleman of the mining rig or digital wallet provider could be skipped entirely. The developers of the network have indicated that its speed would enable it to “be used at retail point-of-sale terminals, with user device-to-device transactions, or anywhere instant payments are needed.” It is expected that Lightning would help Bitcoin to become competitive with other instant payment platforms and that it could revolutionize the way that peer-to-peer payments are transacted.
Article Credits to investopedia