The Lightning Network: Bitcoin Sidechain:

Bitcoin Sidechain: The Lightning Network

Why is it needed?

Speed or transactions per second

The following information on the Bitcoin Lightening Network Is derived from Blockstream the digital technology company website, a major company, which possesses a particular technological expertise; blockchain side chains. So it was picked by the Bitcoin Foundation to explore using a Bitcoin Sidechain as a means of increasing Bitcoin Transaction Speed as an alternative way of scaling Bitcoin to do more transactions per second, as a preliminary necessary trait to handle large scale commercial purchases.

Microtransactions

The second aspect of the development was developing the capability for Micro-transactions. Now micro-transactions are very important as Bitcoin value reaches the 18k range, as the majority of purchases are less then this. In fact certain commercial uses of Bitcoin would require 500 Satoshi unit purchases, something smaller then the miner or transaction fees for that transaction. Hence these and other reasons stimulated research into a sidechain as a solution.

Success?

Surprisingly, information I obtained from the Blockstream website would suggest that Blockstream and its partners achieved their goals. The following information is published there.

Lightning Network

The Lightning Network is a micropayments protocol that enables instant, low-cost Bitcoin transactions. Blockstream is a major contributor to this exciting technology alongside other industry leaders and independent developers.

The Lightning Network is a new protocol layer built on top of Bitcoin. It uses cutting-edge smart contracting to achieve faster-than-VISA transaction throughput, while retaining the peer-to-peer nature of the Bitcoin protocol.

The Lightning Network enable faster, cheaper Bitcoin payments, and it opens up a world of microtransaction use-cases that are not possible within the traditional financial system.

The Lightning Network reduces Bitcoin transaction times and fees.
This is achieved by reducing the number of transactions that need to be forever stored on the blockchain. Instead, funds are held in smart contract “payment channels,” and transactions are exchanged outside of the blockchain between transacting users. The final state of the payment channel balance can be broadcast to the Bitcoin network at any time, securely settling the funds on the blockchain.

Microtransactions

Lightning makes secure global microtransactions a reality. New digital business models will become possible for the first time, from the sale of digital goods to on-demand access to online services. For more ideas, take a look at some of the Lightning Applications (LApps) we’ve built.

Privacy

Transactions on Lightning are not recorded on the blockchain and are shared using onion routing by default, which provides users with a more private way of transacting bitcoin compared with standard Bitcoin transactions.

My thoughts on this information about The Lightening Network

Finally a blockchain with faster transaction time then Visa

If this information is correct, and I am still researching third party verification of these transaction speed estimates. The Bitcoin Lightning Network may have reached another milestone in the development of the blockchain. We have a blockchain with a greater transaction per second capacity then Visa, one of the most prominent financial transaction companies in the world. I think we should all pause and acknowledge this moment as an important milestone in the history of cryptocurrency and commerce on the blockchain. But research it to verify and then see what plans there are to utilize it. And since this code is open source, we should have developers paid to see if this is useful to other proof of work or proof of stake blockchains out there,.

Second we should also acknowledge another important milestone for the Bitcoin Lightening Network, micro-transactions.

This is important because transactions on the Bitcoin Network cost Bitcoin. This made micro-transactions impossible as the fees exceeded any profit. But the Bitcoin Lightening Network creates micro transaction fees. So now micro transactions can be profitable. This is important because Micro transactions aren’t possible on the Visa Network. This means there is a whole niche of commercial transactions involving Micro transactions that can only be done on The Bitcoin side chain Lightening.

More poor then rich, more small transactions then big.

Consider that there are more poor people in the world then rich, there are more small commercial transactions then large and there are potentially more Micro transactions then Macro transactions. Thus means a very large volume of transactions. If we learned anything from Sam Walton, the legendary builder of Walmart, and once the richest man in the world with a personal fortune of 12 billion dollars USD, it’s that you would rather have a small margin of profit on millions of small transactions then a large margin of profit on very few transactions.

I believe that Innovations such as these are milestone achievements on the pathway forward to mass adoption of cryptocurrency and the blockchain.

The future of decentralized finance is here.

✍️ By Shortsegments.