Lightning Network - Perhaps the Last Chance

Lightning Network - Perhaps the Last Chance

By Zenthereum | Zenthereum | 12 Jul 2020


We keep reading about the Lightning Network for many years now. It has been so long the development is taking place that most people have already stopped discussing it, or reading about LN. The layer-2 solution is still being tested and not to be used by anyone that does not possess vast programming skills and knowledge of the Bitcoin network.

LN was the solution proposed since 2015 to allow Bitcoin to scale and it is being developed ever since. Currently Bitcoin is not able to become a worldwide currency. The narrative has changed after the failure of 2017 where transactions stuck in the mempool for days and fees reached astronomical prices.

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mempool 2017-2018 (unconfirmed transactions)

The concept of LN is a network running outside of the Bitcoin's blockchain, where transactions are performed off-chain and both sender and receiver have to sign the transcaction using their private keys. The transactions are later added on the blockchain.

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Source: Investopedia

There have been many articles and reports written so far about the centralization of the LN network and various problems that might surface. The latest theoretical vulnerability that was reported for the LN is the possibility of a "flood and loot" attack. This article by coindesk covers the basics of this concept.

My intention with this article is not to explain the Lightning Network or the developments but move to an important part of a possible mass adoption. Bitcoin is still the number one cryptocurrency and has diehard fans. Most of them right now understand that Bitcoin cannot become a currency with the current structure and are mostly interested in price speculation and shilling their bags on twitter while hoping that someday soon it will reach 100K USD.

Once again it is obvious that no one is going to buy Bitcoin with the narrative that it is digital gold for one reason. Gold is old news. Its price is not reflecting any use case now. It has been used for three thousand years just for showing off. Since technology evolves, gold fades and becomes just a memory of how societies were built according to the shinny feature of a useless element. Gold kept its value during history as it was used to back national currencies. It added value to the currencies but the currencies were also appreciating the value of gold, providing it with the only use case it could ever have.

With the digital evolution of economics, gold is no longer needed. It has no purpose. Of course, if all traders and investors think it is a safe harbor, it will be one. Still, it seems that government bonds are more desired for this reason, and serve a better purpose than gold.

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Image Source

Somehow there was a perception that Bitcoin is not for the masses anymore but the focus should be on hedge funds and institutional investors. I've seen many such opinions forming out of nowhere and not getting the proper answer. One guy literally said a few months ago: "Bitcoin is not for everyone", meaning that it is an asset just for the 1% as this person explained later. Made me think that I wouldn't want any part of it if this is the case.

Anyway, it is obvious that Bitcoin is not touching the masses. The reason has to do with Bitcoin not being a currency and not even focusing on this feature anymore. While Bitcoin is run by consensus, I fail to understand how all participants think that Bitcoin will reach $100,000 without any real development or adoption. 

With the Lightning Network Bitcoin will have a chance to be used in vending machines, in Starbucks and in McDonalds. People will use Bitcoin if it is easy to use. If it saves time and fees. If it doesn't proceed but take another 10 years to be developed then the only use-case will just be price speculation which will only lead to lower price, according to its lower usecase.

Bitcoin was supposed to be a P2P digital cash network and a digital store of value. Taking away the feature of being a currency will only create problems for the store-of-value feature as well. These two attributes must co-exist, as canceling one will effectively cancel the other. A last chance to succeed is presented. If Bitcoin fails to scale again, there will be other coins ready to cover this gap.

Header Image Source

First posted on read.cash



Zenthereum
Zenthereum

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