How to Scale Bitcoin or What is the Lightning Network?

scaling bitcoin

Blockchain is an absolutely revolutionary technology that can change almost all branches of human activity. But it has one rather serious problem that prevents it from “conquering the world” – this is speed. Unfortunately, now the problem of scalability does not allow using this technology, so to speak, at full capacity. As the more participants of the network there are, the slower speed of its work will be. There are several options for solving this problem; we will talk about one of them today. So, the technology of the Lightning Network: what is it and how will it help Bitcoin and other coins to become more nimble?

Contents:
(please, click the topic to scroll down to it)

  1. History and operation principle of technology
  2. What is the Lightning Network?
  3. Main purpose and scenarios of application
  4. Conclusion

1. History and operation principle of technology

Thoughts about creating a solution to increase the speed of the Bitcoin network began to appear almost immediately after its creation. The first brick in the foundation of Lightning Network technology was the idea of ​​creating payment channels between the two users. The payment channel is a kind of autonomous corridor between two bitcoin-wallets, transactions in which can occur without the participation of the entire network. Such a solution will resolve several issues at once:

  • transactions within the channels are almost instantaneous, as they pass directly, without the participation of the whole blockchain;
  • commission fee for such transactions is not charged, since it does not require processing by miners.

How do the payment channels work?

Channels work as deposit cells, in which two users must firstly put equal shares. Only the fact of opening the channel is recorded in the blockchain, everything that happens inside next remains anonymous for all other network members. Means that are stored in it cannot be spent by one participant, for this, the mandatory permission of the second user is required. These coins can only be used for transferring to each other.

Suppose user A and B have placed 5 BTC in the trade channel, then user A expresses the desire to send 3 BTC to the user B, do you think what is necessary to do for this? He just needs to transfer ownership of the required amount to user B.

A similar concept had been introduced back in 2009, but only in 2018 such ideas were implemented in a more or less working tool called Lightning Network.

2. What is the Lightning Network?

Without consolidation in network, the channels themselves cannot become a comprehensive solution to the problem of blockchain’s scalability. In order to describe the work of the Lightning Network, it is necessary to take three users A, B, C at once. Trading channels are open between A and B, and also between B and C. Let user C want to transfer to user A a certain number of coins (there is no channel between them) . In this case, he asks the user B to write out the receipt to user A, and then he carries out the transaction in favor of B via their channel.

This is a fairly simplified illustration of the operation of the Lightning Network; it can carry many levels, which will significantly reduce the load of the blockchain.

3. Main purpose and scenarios of application

This technology has recently gained popularity, as the scope of its application is quite extensive:

  • increasing the bandwidth of popular cryptocurrencies (now the technology works only with BTC, but in the future it can appear in ETH, LTC, etc.);
  • a significant increase in the speed of work of cryptocurrency exchanges, which would allow traders to make instant transactions;
  • instant payments within applications, games, etc.

4. Conclusion

The technology of the Lightning Network has great prospects, in the foreseeable future it can become the main one in the industry. It allows you to substantially unload the blockchain network and increase the speed of transactions. In the last few months, this technology is rapidly gaining a new audience.

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WordPress Launches Beta Version of Publishing Blockchain Platform

WordPress is planning to develop and launch a special publishing resource that will work on the blockchain technology. It is already known that the developers will call the platform Newspack. It will be free to post materials. The creators of the platform are confident that the use of blockchain in this case will affect the development of journalism.

The development of modern blockchain blogs

Now the developers are preparing the beta version of the platform for launch, which is planned for the middle of this year. However, anyone can already put the resource to the test. The feature of Newspack is that it will have its own version of CMS, which will allow editing content directly on blockchain. This will not affect CMS negatively, but vice versa will expand possibilities for ordinary users.

Until launch of the platform, the project will be financed by Automattic, and after all the users will be charged $ 1-2 thousand per month. There will also be a free version available, which will have limited functionality. The end of the platform development including the integration of all additions is scheduled till January 2020.

According to the information posted on the WordPress blog, Google will finance the platform, investing more than $ 1.2 million in its development. Civil Media’s progress is supposed to be used in order to use various plugins for CMS blockchain version.

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WWF Will Handle the Supply Chain with the Help of Blockchain

The Australian division of World Wildlife Fund has decided to integrate the blockchain technology into its supply chains in order to track down and store data on various kinds of food.

WWF partnered up with the company BCG Digital Ventures to create a blockchain-based platform called OpenSC and bring the plan into reality.

According to the official announcement of WWF Australia:

OpenSC enables businesses to track their products – anything from food to tissue paper – by adding a unique blockchain code at the product’s point of origin, such as the moment a fish is caught at sea.”

Moreover, OpenSC will allow its users to scan a special QR-code on the food they want to buy in order to see the information on a specific product: from its properties to how it traveled in the supply chain.

This is not the first time an organization or company of a global scale is turning to the blockchain technology. We remind you:

Ford Will Fight Child Labor in Africa Using Blockchain

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BitPay Transactions Surpasses $1B in 2018, B2B Payments Records 225% Increase

BitPay is a US-based bitcoin payment provider which has recently announced its financial results of the past year. The company has processed over $1 billion in transactions alone. Moreover, its B2B payments record 225% increase in compare to 2017.

The main reason of such a lift-off is that Bitpay added a lot of new clients, like Dish Networks, HackerOne, and the State of Ohio, as well as many other law firms, data center providers, and IT vendors.

The CEO of BitPay, Stephen Pair, commented on this development:

“BitPay’s B2B business continues to grow rapidly as our solution is cheaper and quicker than a bank wire from most regions of the world. To process over a $1 Billion for the second year in a row despite Bitcoin’s large price drop shows that Bitcoin is being used to solve real pain points around the world.”

BitPay mostly supports Bitcoin transactions, however, it also supports payments with Bitcoin Cash, Gemini, and Paxos. During that year a lot of companies had to lay off their employees due to the market situation, yet, Bitpay conversely increased its manpower by 78 percent in the past year.

In addition, BitPay is attractive to the investors, in 2018, it raised $40 million in Series B funding round taking the total raised capital to $70 million.

We remind you

Two European Finance Regulators Urge the EU To Adopt Crypto and ICO Rules

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Is Bank of America Going to Cooperate with Ripple?

As we all know, the crypto market is still in a deep recession. The collapse of cryptocurrencies at the end of last year negatively influenced all coins, however, some of them suffer less than others.

One of such coins was Ripple. Not only did it manage to outrun Ethereum in the rating, its blockchain platform keeps being implemented widely by the world’s largest companies in various spheres.

We remind you:

Ripple: 13 Financial Institutions Have Joined RippleNet, Surpassing 200 Customers All Over The World

Recently, there appeared rumors on the Internet, saying that the second largest financial institution, Bank of America, might be considering forming a partnership with Ripple Labs and incorporating the blockchain technology into its system, according to Fintech News.

Currently, the bank is using SWIFT technology for international transactions, which proved to be quite inconvenient, slow and insecure.

It is still unclear whether Bank of America wants to fully apply Ripple technology or create a similar app, but its main intention is to let the customers make transaction between various banks in a safer and easier way.

Neither of the sides have officially commented on the matter so far.

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Ford Will Fight Child Labor in Africa Using Blockchain

According to the report made by Reuters, an American major car manufacturer Ford is partnering up with such giants as IBM, LG Chem and Huayou Cobalt to create a joint blockchain platform which will track down cobalt coming from Congo.

This project is aimed at helping children who are working at cobalt mines in Congo against their will and against any human rights.

The blockchain platform is going to analyze the supplies of cobalt coming from Congo to be later utilized to produce lithium-ion batteries (which can actually be found in Ford cars) and, if it is coming from mines where child labor is applied, make sure it never makes its way into the world market.

Moreover, the future plans in this direction involve using AI chemical analysis in order to identify cobalt from other metals in the supplies, since they often merge together naturally, making it impossible to distinguish between them.

This important step in fighting child labor in Africa has been in the making since the December of last year, however, the companies taking part in its implementation chose to keep it quiet until recently. The trials of the platform that will soon be conducted are going to track cobalt form Huayou mines to LG chemical plants and finally to Ford vehicles.

We remind you:

The UN Will Use Blockchain to Develop Healthcare in Africa

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A Video Gamer Received a 20-Bitcoin Donation on Twitch

A video game player under the nickname Sick Nerd received a donation from an anonym in the amount of 20 Bitcoins when playing the game RuneScape and streaming it on the platform Twitch.

Sick Nerd mentioned this on his Twitter:

At first, the streamer received only 4 BTC. He didn’t take it seriously right away, but kept receiving new donations in cryptocurrency. Overall, Sick Nerd became richer by over 20 BTC during his streaming session.

This is the largest crypto donation sent to a video game player ever, and, of course, the largest donation ever received by Sick Nerd (more than 70 thousand dollars).

Cryptocurrency keeps making its way into every sphere of human activity, and video games are no exception. We remind you:

Cryptocurrency Games: Bitcoin Game Review

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