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Why The Lightning Network Promises To Break New Ground For Bitcoin

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Why The Lightning Network Promises To Break New Ground For Bitcoin

Over the decade since Bitcoin first made its debut, it has repeatedly upended expectations among traders, within big banks, and throughout the realm of global finance of what a financial asset can be. The blockchain technology that comprises Bitcoin rests upon a decentralized system of nodes where transactions can be processed and registered between parties at minimal cost and with maximum security. Since there is no centralized server in the Bitcoin blockchain, it cannot be hacked, and the code cannot be manipulated without all other participants on the blockchain network seeing what is happening.

However, Bitcoin’s inability to scale given widespread adoption has been a major sticking point for institutions and traders alike. These growing pains have not been lost on speculators, stakeholders, and adopters of this technology. That’s where hard forks, technological changes, and new iterations of Bitcoin come into play. The latest shakeup for Bitcoin is the lightning network, which is widely regarded as the most powerful solution to scaling challenges.

The lightning network is an additional layer on the Bitcoin blockchain system that allows for rapid and cost-effective transactions processing. The technological genius behind the lightning network is several years in the making. It’s inception dates back to 2015 via proposals made by Joseph Poon and Thaddeus Dryja. It is not a replacement for Bitcoin, it is an additional network that operates on top of the existing Blockchain. It’s akin to the Iron Man suit that Tony Stark wears – it enhances abilities rather than augment them, and it can make amazing things happen.

What Do the Experts Think of the Lightning Network?

Stavros Lambouris, CEO of the international trading platform HYCM Europe, had the following to say about the latest advancements vis-à-vis the lightning network:

We recognize how important cryptocurrency is to the global community. We are learning about its many applications on a daily basis. The blockchain network is the construct upon which a new financial system is developing. Thanks to the lightning network, there are now user-generated channels that transmit payments to and from. There’s no need for trust to exist in the system, since the smart contract between parties ensures that the contract is executed in real time, or as conditions are met. Provided the currency exists between both parties, there are no hiccups and no delays in processing transactions. The SegWit protocol on the BTC and LTC networks gave rise to this new age technology. And thanks to the security of the decentralized, anonymous, and secure blockchain network, the lightning network is a positive development.

Reasserting Dominance in the Crypto-sphere

It cannot be stressed how important the lightning network is to Bitcoin. After reaching $20,000 in December, the world’s premier cryptocurrency has been consolidating in a lower range. The lightning network may prove to be the panacea to many of the scaling problems faced by Bitcoin, which is capable of processing blocks of transactions in 10 minutes. The lightning network code is complex, and it requires rigorous testing. Just recently, Lightning Labs from California launched a beta version of their software. There are still limited transaction sizes, and the system is geared toward tech-savvy users and developers. However, the exponential power of this Bitcoin blockchain overlay network could put the cryptocurrency back on its pedestal where many crypto aficionados believe it belongs.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Bitcoin marketacrossCryptocurrency Fintech General

 

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