According to experts, the complete activation of the Lighting Network protocol in the Bitcoin network can become one of the most important events in the history of the first cryptocurrency. This protocol will allow users to conduct an unlimited number of micropayments outside the blockchain, thereby eliminating the problem of low bandwidth and high fees on the network. Bitcoin, however, is far from being the only blockchain that develops and works on the adaptation of this innovative technology.
The Role of the Lightning Network Protocol in the Crypto Market
The first Alpha release of the Lighting Network protocol in Bitcoin was launched in early 2017. In January 2018, Blockstream, who's responsible for the implementation of the protocol, announced that the Lighting Network had been activated on 60 nodes, available on Mainnet, and running in test mode. At the moment, the network has 831 nodes and 1,780 open channels.
Initially, the Lightning Network protocol was conceived as an add-on for the Bitcoin blockchain and is a network of two-way payment channels, through which an unlimited number of transactions can be made. Thanks to the Lightning Network, users can conduct an unlimited number of payments without including them in a blockchain, and only the final balance is registered. Thus, the protocol has become an alternative to increasing the block, as a solution for the network scalability problems.
This problem is faced by the developers of many cryptocurrencies. To date, in addition to Bitcoin, Litecoin, Zcash, Ethereum, and Ripple are working on the practical implementation of the protocol or a similar add-on for the blockchain system. Also, in late January, Stellar developers announced they planned to add the Lightning Network to improve network security and increase bandwidth.
The developer of Bitcoin Core Jeremy Rubin, who is also the head of the Lightning Network development team in Stellar, is confident that this protocol is necessary for any payment platform:
"Perhaps, Lightning is the most important innovative protocol that is now being implemented in the crypto space. When Lightning Bitcoin's network is fully launched online, any community that has not prepared its off-scale scalability solution will be left behind and will bite the dust."
Solutions Similar to the Lightning Network
Not all blockchain projects, however, are interested in implementing the Lightning Network in the same way as Bitcoin.
In December 2017, the developers of Ethereum launched the Raiden project on their network, an off-line network scaling technology, which, like the Lightning Network, provides the operation of payment channels outside the blockchain. At the same time, the team of the NEO platform is working on a similar project named Trinity. Despite the fact that these projects are launched in different codes, both pursue the same goal of introducing a separate network for conducting transactions "on top of the blockchain."
A group of cryptographers working on the Zcash cryptocurrency, endowed with a high degree of confidentiality, proposed a new technology for carrying out anonymous crypto payments and called it the Bolt project. It is at the development stage, and it is not known when it will be implemented.
At the same time, the developers of some projects are sure that the solution to the problem is to scale the block at the base level. So, the Grin cryptocurrency, which is scheduled to be launched this year, will use complex cryptography in the blockchain so that unnecessary information is "consumed" over time. In the long term, this block will use less space as it grows.
Other teams are considering the Lightning Network as part of a multifactor approach to solving the problem of scaling the blockchain, which contains a lot of potential opportunities. The Stellar roadmap indicates that the cryptocurrency does not need the Lightning Network protocol, but this technology will have a huge positive effect on the long-term scalability and reliability of their network. This is also stated by Ripple technical director Stefan Thomas, who noted that the XPR registry is more scalable than that of Bitcoin. Nevertheless, the team is actively exploring the second-level payment channel technology to work with future users.
Development of the Lightning Network Protocol
Some players on the crypto market are already discussing the opportunities that will arise when many Lightning Networks are combined. As stated by Elizabeth Stark, the co-founder and head of Lightning Labs, one of the many startups working on this idea, there is no successful adaptation of the technology anywhere beyond the boundaries of Bitcoin and Litecoin:
"Some communities are interested in the idea and have already started early development, but they will need time to implement them."
The introduction of technology will contribute to the development of the industry, where the place of crypto exchanges will be taken over by technologies that allow users to exchange all kinds of assets between different blockchains. It is all about atomic swaps, which were made possible by the Lightning Network protocol. Stark notes this as well:
"I feel that many cryptocurrencies are interested in swaps between blockchains and in decentralized exchanges. And Lightning is the direct way to this."