“Thank you for your purchase” – these are likely to be the words of the cashier at the supermarket checkout. The cashier’s thanks come out as easy and fast as paying with a debit card. Will that soon be possible with Bitcoin, too? The Bitcoin Lightning network shows how it can work.
In March 2018, just a year ago, Californian technology company Lightning Labs started the Bitcoin Lightning Network (LN). This service tool enables simple and fast payments with bitcoin. The principle of the Bitcoin LN is that the individual Lightning transactions are not listed on the blockchain but sent via payment channels. They make up the core of the network. Normally such a payment channel is opened between two participants of the network. The payments are made via a so-called multi signature address. This practically works like a vault with two locks, each partner possessing a key. To deposit or remove bitcoins, both keys are required.
The trading partners send bitcoins back and forth through their Lightning channel. These transactions are immediately valid. The payment channel will close after a set period of time or if one of the partners wishes to access the transmitted bitcoins. Then the bitcoins are divided onto both partners according to the current balance. Regardless of the number of transactions executed, the Bitcoin blockchain will ultimately show only four transactions: one for opening and closing the channel, and two for updated account balances.
If you want to use Bitcoin LN, all you need is a specific wallet. A Bitcoin Lightning wallet has the same functionality as a common Bitcoin wallet but, moreover, allows you to send and receive Bitcoin Lightning transactions.
The huge growth of the Bitcoin Lightning Network in the past 30 days alone shows that the possibility of faster and easier Bitcoin payments is very well received: The number of Lightning nodes increased by 17.61 percent to 7,468, the number of Lightning Channels is up 41.7 percent to 39,326, and network capacity is up 53 percent to 1,064.81 bitcoins (106,480,818,707 Satoshis). And that is not all: Numerous channels are private and do not even appear publicly. Thus, the previously counted amount of 1,064.81 bitcoins is most likely only a bottom value of the actually transferred Bitcoin amount.
The distribution is supported by easy-to-understand web articles as well as manuals and tools for using the Bitcoin LN. These include James Lopp’s Lightning Network Resources, user guides on blockbuilders.de, an FAQ article on medium.com, or Pierre Rochard’s Easiest Bitcoin Lightning Guide (also on medium.com).
The LN Trust Chain gained significant public awareness, through among others, the Twitter user @hodlonaut who launched the Lightning Torch Initiative on 19 January 2019. The Lightning Torch is modeled on the Olympic Torch and in less than three weeks was passed across all continents and by almost 40 countries.
The Bitcoin LN is still in its infancy. Nevertheless, it is already a practical answer to the criticism of the still limited number of Bitcoin transactions per unit of time. The Lightning Network will evolve and show more and more improvements. After all, this baby is only one year old. Happy birthday!