The Lightning Network simplified. What I learned from guest speaker Ecurrencyhodler.
It was truly a pleasure to be part of the first Litecoin (LTC) meet-up in Orange County in late 2018. The event organized by the Litecoin team of west coast volunteers showcased a fantastic presentation by guest speaker, Andrew Yang also known as @Ecurrencyhodler in the crypto community. Author of the book “Understanding Litecoin” and COO of BlockFuse, Andrew focused his presentation on the Lightning Network Technology. He explained several points on how the Lightning Network can help solve the scalability problem of both Bitcoin and Litecoin. A special thank you to my husband for lending us his work space, Travertine Market, as a location for the meeting and allowing us to make this event Free for everyone.
The Lightning Network is a very promising and exciting technology for both the Bitcoin and Litecoin community. In this article I will point out the reasons why. At the same time the Lightning Network has also been criticized by the Bitcoin Cash community. To start I will pinpoint whhy I beleive the Bitcoin Cash community is fundamentaly incorrect.
The Bitcoin Cash community, last year opted to split from the original Bitcoin blockchain and adopted a block increase and a new coin named Bitcoin Cash. They stated that block increase solved the scalability problem, and it does temporarily. However this solution proves to be unsustainable. In his presentation Andrew points out that over time, a block increase can lead to a large blockchain size, which will make it unprofitable for a regular person to run a node on their computer. Consequently, jeopardizing the main roots of decentralization.
On the other hand, The Lightning Network just came out with a very smart solution for this problem, and one that does not need to change the core values that were set by Satoshi Nakamoto. It is a solution that runs in parallel aiding the network and enabling faster and more intricate types of payments. Payments thru the Lightning Network are run outside of the blockchain. A short-cut that saves us from waiting on 6 confirmations ( on average 15 mins for Litecoin and 1 hour for Bitcoin). And is enabled thru the use of channels.
What is the change ramifications that this technology can bring?
The implementation of the Lightning Network can and will bring two significant advantages. Faster processing as mentioned above and the prevention of network clogging.
With Lightning network the possibilities for Bitcoin and Litecoin use expands. One of them is of point of sale terminals. It is possible to complete a purchase without waiting for confirmation while still making the transaction secure. But how if the 6 confirmations haven’t been completed? Well thru a channel that is open, which in a sense escrows the funds for s short period of time, until the transaction is finalized. In addition, after waiting on the recommended 6 confirmations many merchants rely onto have reasonably high assurance of payment finality for on-chain transactions.
Unclogging of the Network is also a huge benefit brought by the Lightening Network technology. With the lightning network one can now send multiple payments in one transaction, eliminating fees incurred in each transaction and simplifying payment processing.
Many other advantages have been highlighted as well, as the protocol facilitates accounting processes and enables a creation of accounts and payment relationships that can be maintained over time. Well through an open payment channel that enables transactions off-chain and only settles on the blockchain once the channel is closed.
Truly fantastic applications that will certainly be build using this incredible resource. If you would like to know all the technical aspects of the Lightning Newtwork make sure to listen to E-currencyholder podcast of this event, coming out Wednesday Nov 14th. It was truly enlightening.
I am also posting below a video of Elizabeth Stark, (CEO of Lightning Labs and Lead Developer) of this project that I recorded during the Litecoin Summit. It is the day she announced the completion of this wonderful project that truly has the power to take the application of Bitcoin and Litecoin to a new level. Watch part of her speech and feel her excitement!
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