With the halving looming and transaction capacity maxed out, some are predicting a doomsday scenario. Much, therefore, depends on the Lightning Network. A “decentralized network using smart contract functionality in the blockchain to enable instant payments” which is capable of an amazing “millions to billions of transactions per second” according to the Lightning Network ’s website.
The Lightning Network is a fairly old — in bitcoin terms — idea which makes use of bitcoin’s inbuilt script system allowing for trustless payments through intermediaries, but enforceable on the blockchain. In responding to a number of our questions, Eric Lombrozo, who has recently come to prominence as one of the main developers of Segregated Witnesses (Segwit), stated:
“Without 2nd layer networks like Lightning, the Bitcoin network must burden every single full node with every single transaction every single person makes. It’s sort of like if every time you pointed your browser at some page every other computer on the Internet would have to process that same page. The Lightning Network allows routing of messages between machines so that it is not necessary to flood the entire network with every transaction.”
The Bitcoin network is designed in such a way that every full node has a copy of the entire blockchain which currently stands at 60GB, according to blockchain.info, increasing by 5GB a month or 50GB a year at the current rate of 1MB per approximately 10 minutes. However, some of this space is taken by low-value transactions. After conducting some analysis, Rusty Russel, one of the main developers of the Lightning Network, shared a graph which suggests that 25% of current bitcoin transactions are for less than $1 with around 70,000 daily transactions for less than $5. Transactions by Value according to Rusty Russell Many suggest that these transactions are better performed on […]
