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Bitcoin’s Lightning network is coming soon to make day-to-day transactions faster

Bitcoin could finally be used for day-to-day transactions. California, USA-based Lightning Labs has launched their beta version of LND, its Lightning network software, which should help users in sending Bitcoin faster to other users.

Current Speed of Bitcon Transaction :

As recently as January 2018, only 7 Bitcoin transactions could be executed per second. Even in February 2018, it took 116.2 minutes on an average to confirm a Bitcoin transaction. When compared with credit cards, which regularly process over 1,000 transactions per second, Bitcoin didn’t fare well for day-to-day transactions. Every transactions needed to be committed on the blockchain, and 1 block was processed in every 10 minutes. These scalability issues have long impeded usage of Bitcoin in our regular daily payment transactions.

Lightning network :

The Lightning network solves this issue by adding a second layer of payment protocol on top of the Bitcoin blockchain. The participant nodes in this network can transact instantaneously. In Lightning network, first a payment channel is opened by committing a funding transaction to the blockchain. This requires committing an amount on the blockchain.

Subsequently, many transactions can be done to update the tentative distribution of funds within the payment channel. These transactions aren’t broadcast to the blockchain, i.e. the transactions are not public. Finally, the final version of the transaction that distributes the payment channel’s funds and broadcast to the blockchain, and the payment channel is then closed. This commitment transaction must be cryptographically signed by the partners in the payment channel.

Other Bitcoin-centric blockchain start-ups Blockstream and ACINQ are also working on the Lightning network, and had released software compliant to the Lightning protocol specifications in January 2018. Lightning Labs software is so far considered to be the most matured. A large number of volunteers worldwide have participated in the release, by testing, finding bugs, and contributing code. Lightning Labs, which was founded by Elizabeth Stark, is working on further improvement before launching the fully market-ready product. Lightning network can be used to send Litecoin too.

Lighting network had dependence on Segregated Witness (c), which is being increasingly adopted now.

As reported earlier, SegWit was implemented to resolve the following drawbacks of Bitcoin:

  1. Scalability and high transaction fees: The limitation of 1 Megabytes (MB) block size meant that only a limited number of transactions could be included in a block. The users had to pay increasing amount of fees to the miners to get their transactions included in the first available blocks, and the fees increased as scalability issues became more pronounced. With SegWit implementation, a new parameter called weight unit (WU) was introduced, and the data required to validate transaction authenticity was moved to a new structure called Witness. The block can now be of 4 millions WUs, where 1 byte of original block is equivalent to 1 WU, however, 4 bytes of the witness block is equivalent to 1 WU. This effectively increased the block size, without a hard fork. Scalability has improved, and the transaction fees have reduced.
  2. Bitcoin suffered from malleability bug, i.e. an attacker could convert the scrambled ciphertext in the encrypted message into a related ciphertext, which could be decrypted to a different plain text. This was risky because the attacker could change the payment address and amount in a payment transaction. Since SegWit moves the signature from the original block, the attacker can’t change it anymore, even if he manages to change the transaction data.

Author: Author : Anujit

Anujit has over two decades of IT industry experience, spanning software development, project management and consulting areas, and has added significant value to the businesses of clients he has supported. Outside of working hours, Anujit is passionate about history and sports.

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Anujit has over two decades of IT industry experience, spanning software development, project management and consulting areas, and has added significant value to the businesses of clients he has supported. Outside of working hours, Anujit is passionate about history and sports.
Anujit has over two decades of IT industry experience, spanning software development, project management and consulting areas, and has added significant value to the businesses of clients he has supported. Outside of working hours, Anujit is passionate about history and sports.

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