Bitcoin scalability is a hot topic—one manifestation being the blocksize debate—and Bitcoin engineers are working on fixes. In its current form, Bitcoin supports 7 transactions per second, while Visa supports roughly 45,000 per second.
The Lightning Network, co-authored by Joseph Poon and Thaddeus Dryja, proposes a system that supports instant transactions and greatly boosts the number of possible transactions per block. Two parties can transact through trustless payment channels that are “off” the blockchain. These bi-directional channels enable instant, reliable transactions, with a final transaction settling on the blockchain. The system relies on hashed time-locked contracts (HTLCs), which expire if not completed by the recipient in an allotted amount of time.
In a paper titled “Reaching The Ground With Lightning,” developer Rusty Russell offered tweaks that simplify the Lightning Network, like removing additional opcodes that would take additional time to win approval among developers. The proposal already requires three soft forks—for transaction malleability, OP_CHECKLOCKTIMEVERIFY, and OP_CHECKSEQUENCEVERIFY—but these changes are widely accepted. The first-version whitepaper explains:
“Adding a new signature opcode would allow many other improvements but that is precisely why it's a matter for longer term research and unlikely to be deployed in Bitcoin in the immediate future.”
The Lightning Network is still not off the ground, but one of the developers thinks it could mean faster deployment. Poon commented enthusiastically on the Lightning-dev mailing list:
“The proposed construction with OP_CHECKLOCKTIMEVERIFY and OP_CHECKSEQUENCEVERIFY may make lightning be deployed *much* sooner. Rusty's idea is fantastic and goes very far in creating a usable way to really try out lightning on Bitcoin.”
“I'll have an update of my paper incorporating these changes, they're really significant,” he added.
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The Lightning Network , co-authored by Joseph Poon and Thaddeus Dryja, proposes a system that supports instant transactions and greatly boosts the number […]