Lightning Network – last chance for bitcoin to become quick. How does it work?

Lightning Network – last chance for bitcoin to become quick. How does it work?

Run Lightning Network promise to spend this year, what could be the biggest event in the blockchain industry.

Bitcoin does two troubles: the time of transactions and their cost. The inability of the network to withstand heavy load led to the fact that the Commission for sending the payment in 2017 has increased more than 23 times and at the time of publication of the material is about $4.5 — weird, if you compare bitcoin and altcoins. To make life easier for network users called technology of instant payment with the near-zero Commission — Lightning Network. Edition AIN.UA says, what is this technology and how it will help bitcoin to compete in the speed of transactions with other cryptocurrencies.

Lightning Network is a technology allowing to transform any cryptocurrency in a quick and reliable means of payment fees are minimal. It was developed by two programmers: Joseph POON and Tag Dria in 2016, the active phase of testing and implementation began only at the end of 2017. Lightning Network is planned to be used for micropayments in bitcoin (and other cryptocurrencies) and discharge it to the main network. Through the use of this technology, the number of transactions per second can be increased to hundreds of thousands of times, and the transfer fee will be reduced to minimal values or even be zero.

A typical transaction in the bitcoin network looks like this: the sender wants to transfer a certain amount of BTC to the recipient and that everything went smoothly, he must pay a hefty Commission which goes to the other person as a reward for including transactions into a block. The transaction is queued, the sender and receiver waiting for it to be written in the block, and only then get the final result. All of this is side effects of small block size (1 MB for the bitcoin network) and a huge number of transactions in the queue.

Lightning Network solves this problem by using so-called “payment channels”. Technology allows you to set up a separate network between the two participants in the core network, the internal transaction which are not recorded in the blockchain, and only be maintained within the channel network. This means that users can make as many transactions between themselves, without loading the main network. Implemented the idea of using smart contracts, roughly speaking, redeemable debentures with multimediali.

When working on such a scheme in the blockchain is recorded only the fact of opening and closing of the channel with a specified beginning and ending balance of the parties, and all transactions that have passed through the channel does not take place in the blockchain. Such a network can not work with only two parties — it easily scales to any size, connecting senders and receivers is a single channel, choosing the best route. Important point: the network sends on the channels not the means, but only information about the possession, that is, the above mentioned receipt, because for the opening of the channel will require payment by the parties of a particular Deposit.

Visualisation of the payment channel. The blockchain will be recorded data about initial and final Deposit of the parties, and the three transaction inside the channel — no

Despite the fact that the participants pay a fee for a transaction twice (at opening and closing), they will be able to make payments without commissions within the channel an infinite number of times. Each transaction with information about the size of the deposits of the parties is not prescribed, but the scheme remains secure. Means that to unlock the money is used only the last signed balance, a copy of which both parties are. Thus to unblock the funds at any time, even if something went wrong.

The main scope of the Lightning Network — cryptocurrency exchange. Now, some of them offer the possibility of transferring funds between registered users with a minimum Commission and even without it. This is possible due to internal processing systems, where the exchange is a Trustee. This system does not require sending data in the blockchain, respectively, less stress on the core network and allows you to conduct transactions much faster and cheaper. Lightning Network in this case can be a processing system for all existing exchanges, allowing you to send funds between wallets without the need to record transactions in the blockchain. The advantages of such a system are undeniable for all parties: it will help to align the exchange rate between the exchanges, and raise the trading volume due to the increase in user activity.

Lightning Network can also be used in online games with their inherent microtransactions, for processing online payments in instant messengers and other applications, and even for torrent of systems in which the peers and seeds will act as sellers and buyers.

View job nodes in real time on a special resource

In the core network of bitcoin now employs 385 nodes (list constantly updated), which support Lightning Network. First Lightning-the transaction took place in December 2017 developer Bitrefill Alex Bosworth managed to recharge mobile phone:

“Recharge using the Lightning Network, launched in the core network of bitcoin. Speed: instantly. Commission: zero. Future: is near,” Bosworth wrote on Twitter.

Run Lightning Network promise to spend this year, what could be the biggest event in the blockchain industry. Activation of the new network can also affect the popularity of some altcoins, which now offer faster and cheaper transactions, such as Litecoin, Ethereum, Dash, Waves and Bitcoin Cash.

We will remind, earlier it became known that the company BitFury has created a tool that will help the police and banks in investigations of fraud with the use of bitcoin and other cryptocurrencies.

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