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The Ins and Outs of The New Lightning Network

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February 7, 2018 | 

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Joanna Newman | 

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If you haven’t yet heard of the Lightning Network, there’s a lot to be excited about. The Alpha version has already launched for testers. If it takes off, this could mean faster Bitcoin transactions that are also cheaper. This is good news in the world of cryptocurrencies and could help solve a lot of Bitcoin’s current issues.

The Lightning Network: A Super Blockchain

The super blockchain, if you will, has plenty of benefits. Where current transactions are posted to the blockchain are shared with the network in its entirety, the Lightning Network lets users create specific ‘channels’ that connect with other, specific, users. It allows transactions to be made faster as it doesn’t post immediately to the blockchain.

Bundling Transactions Together

Instead, the Lightning Network aims to hold onto those transactions, but doesn’t post them right away. It eventually posts only the final balances involved to the blockchain network. When it does this it closes the channel connection and secures the transaction.

The Benefits of the Lightning Network

The benefits here are that the network has to process less messages, thereby avoiding unnecessary information being passed and alleviating pressure. When two users initiate a channel between themselves, they post an initial amount of coins and initiate a contract. This transaction is posted to the blockchain ledger as one, full transaction. The parties involved can then transfer coins between each other instantly until the contract is fulfilled. When the contract is closed, it is then posted to the blockchain network again, leaving only two official records of all transactions; the creation of the channel and its closing.

Keeping Transaction Times Down Using Channels

This helps to avoid the time it takes for transactions to pass between users, which can sometimes take the better part of a day. Opening up these channel contracts between users, then, is much faster. The transactions made are not official until they are posted after the channel has closed, but they are still very much legitimate throughout, at least on the Lightning Network.

Open Channel Contracts Can Be Used By Other Users, Too

Still, this won’t necessarily improve transaction times, as creating a new channel each time users want to negotiate a contract has the same issues as regular blockchain tech. It will eventually clog up the system, putting more pressure on it. Each open channel, then, can be piggybacked upon by other users for a small fee. This linking of channels makes everything much more efficient.

Less Stress Means Faster Transaction Times

All of this means less stress on the blockchain network, with a lot of transactions being made on the side before being lumped in together and processed on a separate network. Despite the fact that it’s still being tested and tweaked, the Lightning Network seems poised to revolutionize the way we engage with blockchains. It remains to be seen whether it’s actually viable for widespread use, but the concept is impressive.

Lightning Network Testing Currently Ongoing

With Alpha testing started in January, we should see the Lightning Network in action soon enough. It still needs a lot of work, but is expect to be adopted in a big way, especially with everything it has to offer. The network’s first transaction has already gone through, however, which elevates it from theory and puts it into the realm of practical applications.

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