Bitcoin Lightning Network Is Coming, The Competition Currency Will Disappear?

 

Transaction fees for the Bitcoin network soared in the past few months , reaching a historic high of $ 30. Many people recommend the introduction of a lower transaction cost, the network is not easy to plug the encrypted currency to replace bitcoin.

High transaction costs on the chain have been doomed to certain categories of payment completely missed with bitcoin, but there are several programs are currently under development to address this issue, of which the Lightning Network (Lightning Network) may be the most viable option.

What is lightning network?

The Lightning Network is a smart contract system built on the Bitcoin blockchain that enables both parties to the transaction to make quick, low-cost payments.

Technically, the lightning network is based on payment channels, and Satoshi Nakamoto, the founder of the project, also made a similar idea earlier in the development of the Bitcoin project. In simple terms, two people put bitcoins into a multi-signature wallet, then sign the transaction to change the amount of bitcoin each can retrieve. Trading participants may close the trading channel at any time, and the last signed transaction containing the latest balance dynamic will eventually be broadcasted and written into the Bitcoin blockchain.

At a non-technical level, the lightning network's payment gateway allows direct transactions between users, at the same time they do not have to be content with their business content (just broadcast part of the deal). Users are able to trace their transactions directly, avoiding expensive and time-consuming interactions on the blockchain. If any party disputes their payment balance in the lightning network, they can send the latest valid status, signed by both parties, to the blockchain, which will not be bribed or corrupted and will be able to make an automatic decision. In other words, no one can lie or fabricate transaction data.

With a lightning network, users can trade with anyone connected to their payment gateway network in a multi-hops manner. This is a network of payment channels, not a means of accelerating transactions.

The main advantages of Lightning Network are: very low cost, instant payment (eliminating the 10 minute bitcoin confirmation time), and privacy improvements (as these transactions are not permanently stored in the open book).

Lightning Network VS low-cost competitive currency

The main reason many competing currencies are famous is that they claim to offer lower transaction fees on the chain (compared to bitcoin). The following is the average transaction fee for the partially encrypted currency network on December 27:


Although there are already some competitive currencies that offer lower transaction fees on the chain, the payment costs on the lightning network are even lower. Two authors of the White Paper on Lightning Networks have said that the transaction rate in this bitcoin second-tier solution is almost zero.

With the exception of lower costs, the transactions in the lightning network take place almost instantaneously, meaning that there is no need to wait for new blocks to be excised before they can be confirmed.

Lightning network can also bring a higher anonymity, but this area still need a lot of work to gradually improve.

Read More: Bitcoin Lightning Network Is Coming, The Competition Currency Will Disappear?