By Block 11 on The Capital
Introduction
Bitcoin, created in 2008 by Satoshi Nakamoto, has seemingly unlimited potential. Both the cryptocurrency itself and the underlying infrastructure, the blockchain, have widespread applications in various industries. However, Bitcoin and the blockchain has always had one undeniable Achilles heel: scalability. Bitcoin’s infrastructure only has the capability to process seven transactions per second. Although for many years this limit was far sufficient, the recent growth in Bitcoin has caused the blockchain to be flooded with transactions, drastically reducing processing speed and increasing fees. Many have speculated over the solution to this issue, with ideas being proposed constantly. Only one of these ideas is currently being tested and seems to have true potential. They call it the Lightning Network.
The Lightning Network, also known as the “off-chain approach” is based on the idea that not all transactions have to be recorded on the blockchain itself, avoiding the seven transactions per second limit. By opening a “second layer” to the blockchain, the Lightning Network, also known as a payment channel. In a payment channel, transactions between two parties can be made away from the main blockchain, avoiding the dreaded seven transaction limit. This channel can then be closed at any time, making only two transactions occur on the main blockchain: opening and closing the channel. This reduces the load on the blockchain, offers an extra layer of security, and avoids the transaction limit.
Growth of the Lightning Network:
The Lightning network was only recently created in 2015. However, many teams have started developing huge Lightning network projects, namely Blockstream and Lightning Labs. Currently, there are around 12,895 Lightning Network nodes active right now, with around 37,000 channels. These projects are growing rapidly and many are asking why. The Lightning Network is growing for a very simple reason: scalability. Companies see how the blockchain’s current infrastructure limits the potential of both the blockchain itself and Bitcoin. Thus, companies are investing tremendous amounts of funding into Lightning Network projects in order to change this transaction limit. Three companies are leading the way in the tremendous development of Lightning Network technologies: Blockstream, Lightning Labs, and ACINQ. Although all being written in different coding languages, each of these programs is set to be integrated with one another, allowing Lightning Networks to become an extremely supported system. One product that has largely caught the eyes of investors is Zap’s latest technology, a Lightning Network wallet. This Lightning Network product acts as Visa’s debit card would, except being based on the Lightning Network. Zap also allows for the transfer of dollars, rather than Bitcoin. Merchants can accept Bitcoin in the form of dollars, truly connecting with its comparison of the Visa card.
Conclusion:
The Lightning Network application to the blockchain is truly revolutionary. By increasing the scalability of the infrastructure, the Lightning Network allows for a significantly higher amount of transactions to occur per second. These technologies are the next evolution of the blockchain and will allow Bitcoin to continue its exponential growth.
Block 11, a Lightning Network blockchain startup, is one of the fastest-growing Lightning Network product providers in the industry. With various products from the B11x Blockchain Payment Portal to the Lightning POS system, Block 11 seeks to change the world through the use of this new network.
Sources:
https://www.coindesk.com/zaps-new-product-lets-merchants-take-dollars-over-lightning-network
https://1ml.com/statistics https://cointelegraph.com/lightning-network-101/what-is-lightning-network-and-how-it-works
Lightning Network Growth - Block 11 Blog
https://twitter.com/thecapital_io
Why Is The Bitcoin Lightning Network Growing? was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.
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