Currently, Bitcoin is the most suitable cryptocurrency globally; however, it has some limitations, which must be solved to take the cryptocurrency to the next level. One of these solutions is Bitcoin’s decentralized Lightning Network, which uses the functionality of “smart contracts” on the blockchain, allowing micro-payments to be made in a short period, regardless of the volume of transactions.
Its Goal: Fix Bitcoin Problems
The Lightning Network seeks to solve the main problems of Bitcoin that prevent its development and massive use globally; these problems are the following: high commissions, extended times for the execution of operations, incompatibility with micropayments, and high energy consumption.
The idea of the Lightning Network consists of the following: If the primary layer of Bitcoin is “congested,” the immediate solution is the construction of an “execution layer” of alternative operations for exceptional cases. Precisely this is the novelty with which this network arrives, the ability to segregate payments under 100 dollars towards the secondary layer, to increase the processing speed of the transactions registered in the distributed accounting network.
Speed is its main hallmark
With this improvement, transactions will be carried out almost immediately (during the temporary parenthesis where the payment channel remains open); those executed transactions are registered in the main blockchain once the channel is closed. Lightning is a transactional protocol without the need for confirmations, thus achieving a double objective: the execution of quick operations and that the miners (with their respective commissions) come into action only when opening or closing the payment channels of the Lightning Network.
New payment scheme and greater flexibility
Under this new scheme, most of the micropayments in this network will be executed through private channels and registered in the blockchain once the operation has been carried out. Previously, a “micro-payment channel” must be opened for this purpose, to which Lightning Network will assign a specific and reduced amount of money in Bitcoins. Once this channel is opened, the information will be transmitted to the main blockchain as any operation; it is when the commission will be applied, and then it will be registered in the distributed ledger block network.
This payment channel can remain open for as long as necessary and agreed by the issuer and receiver; within this period, the payments made will be free. The Lightning Network is not required to have a single or direct channel; this feature allows it to expand its scope and capacity for action considerably.
Will it fix Bitcoin’s problems?
According to the information published so far, the Lightning Network has a lot of potentials to solve the current problems of Bitcoin. However, it is necessary to wait to see how this update is implemented and how the community and users respond to these new functions, tools, and procedures.
What do you think about this topic? Do you think this update will fix Bitcoin’s problems?
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