Bitcoin Lightning

CryptoTwitter Blog: Comment of the day @lightning

After years of testing and development, Lightning Labs has launched its new mainnet beta (lnd 0.4) called ‘Lightning Network Daemon (LND). The long awaited developer-friendly software client has made mainstream use of Bitcoin’s lightning network a reality, reviving the long-lost dream of banking the unbanked and facilitating micro transactions.

The startup raised $2.5 million from almost a dozen investors including the Twitter founder Jack Dorsey, Litecoin founder Charlie Lee and former PayPal COO, David Sacks.

It marks a major milestone in Bitcoin’s history as it drastically changes the potential for bitcoin to become a mainstream global currency that is instant and cheap to transact. However, the beta stage will throttle the total single payments to $1,400 per channel and only be available to ‘advanced users’. In order to qualify as an ‘advanced user’ you mist run a bitcoin full node and use LND’s command-line interface.

The announcement from Lightning Labs reads:

“With this release, lnd has gained a considerable feature set, deeper cross-implementation compatibility, a new specialized wallet seed, comprehensive fault-tolerance logic, a multitude of bug fixes, and much more!”

Lightning Labs Blog

The lightning network has been active for some months; however, the lack of developer-friendly and non-buggy software client has caused several issues. Funds were being lost, and payments would rarely be able to find their destination even if a route through the nodes was available. The number of nodes has been growing rapidly and there are now over 1,000 nodes forming over 2,000 channels.

It does raise the question as to what function Bitcoin Cash serves as it can no longer compete with Bitcoin’s throughput, speed and low fees… 

What Is Lighting?

Lightning network is a ‘layer two’ scaling solution for bitcoin and aims to increase bitcoins throughput, reduce transaction fees and increase speed of payment. Transactions on the lightning network work by opening channels between nodes that are effectively staked with bitcoin.

As long as you have bitcoin in a channel and are connected through any route of nodes you can transact instantly and almost for free. When you want to close the channel the amount you have sent or received is netted with a single transaction on the main bitcoin blockchain. In theory you can transact thousands of times with only one transaction being sent on the bitcoin blockchain. This will drastically reduce fees which have hit over $100 in recent months.

The next question is when will exchanges, merchants and bitcoin hodlers start using the exciting new technology?