Bitcoin (BTC) has long maintained its position as the #1 cryptocurrency, despite severe scalability problems and extremely high fees during high network congestion as we all experienced in 2017 at Bitcoin’s all-time high (ATH).
While these problems have since subsided due to decreased activity and the increase of segwit adoption, if Bitcoin were to reach levels close to its ATH again, the problems would arise, significantly impacting Bitcoin’s reputation in a negative way.
Lightning Network to Solve Bitcoin’s Scalability Issues
The Lightning Network (LN) is poised to solve Bitcoin’s scalability issues and high-transaction fees through a technology that runs on top of the Bitcoin blockchain (a 2nd-layer solution). The Lightning Network will allow for near-instantaneous transactions and fees of less than $.01.
In simple terms, the way it works is users of the network send and receive Bitcoin transactions through a Lightning Network channel. These channels are kept separate from the main blockchain to increase speed and reduce costs, but all transactions are recorded on Bitcoin’s main blockchain.
Despite being touted as the technology that will solve Bitcoin’s scalability problems, the Lightning Network has been attacked by some members of the community (specifically Bitcoin Cash and Bitcoin SV supporters). Most criticism hinges on how the Lightning Network brings the danger of centralization along with it, but there are also many advocates for LN that are optimistic about its development.
Lightning Network in Real Life
One of the more widely known supporters of Bitcoin’s Lightning Network is Anthony Pompliano, founder and partner at Morgan Creek Digital. In a recent tweet, Pomp praised the lighting network and published an open invitation for someone to prove its excellence.
The Lightning Network is so fast.
I wouldn’t be surprised if transactions go from wallet to wallet faster than the time it takes for a credit card machine to process the chip on a card that gets inserted.
Someone should run a test to time it and record the whole thing on video.
— Pomp 🌪 (@APompliano) February 5, 2019
Following Pomp’s request, a researcher by the name of JP Thor meticulously compared LN to traditional means of payments, highlighting his findings in an in-depth Medium post.
Right off the bat, JP Thor mentioned that Bitcoin’s LN will always be faster than Visa in terms of transaction-processing compacity. However, he did note that there are other things to consider.
Sending a payment across the LN will always be faster than Visa because a Visa payment involves an auth with a third party. LN payments can be processed as fast as a TCP/IP connection between two peers. A single channel has been shown to process over 250 TPS, so the network can scale to no real upper bound.
The researcher performed a number of payment tests with different LN wallets (Wallet of Satoshi and BlueWallet) against the fastest “traditional” payment method out there: MasterCard debit card with Apple Pay. He concluded that there is not much difference at the level of payments, transactions, and UX, noting that Apple Pay was a few seconds faster, but not enough that you would notice it.
However, JP Thor did clarify that LN has room for significant improvements and will likely be closing the gap in the months to come.
When do you think Bitcoin’s Lightning Network will achieve mainstream adoption among the crypto community? Let us know what you think in the comment section below.