Lightning Network: How Far Away Is It?

Conor Maloney

July 20, 2018

The Lightning Network is a second layer scaling solution made by Lightning Labs that promises to finally solve the huge problem of scaling the Bitcoin Network.

Whereas Bitcoin transactions were originally much faster, increased use and a larger blockchain database has clogged the network and led to transactions measured in minutes as opposed to seconds with high fees to boot.

The issue was the center of much debate in the community, with some people feeling that the block size should be increased to allow cheap, fast transactions and others believing that the increased size would lead to centralization. When Bitcoin forked last year, the latter camp continued working on the project known as the Lightning Network, an off-chain solution that will process much of the heavy lifting in a Bitcoin transaction in a ‘side chain’ to decongest the network and allow scaling without changing the block size.

The project was only proposed in 2015 – so what’s the situation now? Here’s a status update.

Lightning Charge and E-Commerce Store

In January of this year Blockstream, a company heavily involved in the scaling debate and Bitcoin fork, released Lightning Charge enabling them to charge transaction fees on the Lightning Network. Blockstream launched a test E-commerce store called Blockstream store to test the speed and cost of transactions and enable the company to create a Bitcoin network product that generates profit on its own without relying on the value of Bitcoin itself.

“By offering an early demonstration of this cutting-edge technology, we hope to bring Lightning to life with real-world functionality, providing a way for you to test Lightning and become a part of the micropayment revolution.”

Blockstream is releasing the Lightning Charge complementary package for c-lightning to make it simpler to build sophisticated applications on top of c-lightning.

“Web developers will be able to work with c-lightning through their normal programming techniques, and they’ll also get expanded functionality such as currency conversion, invoice metadata, streaming payment updates and webhooks,” says the Blockstream announcement. “Together, these additions make it easy for developers to use c-lightning to create their own, independent web-payment infrastructures.”

Mobile Wallets for Faster Payments

A number of Lightning Network mobile wallets have been developed or are in development, aiding with adoption and progressing the project further.

Eclair is technically a Lightning node,  not a remote control app for a node running on a server. Users can transfer money from a checking to a savings account by closing channels, generate Lightning invoices, and pay Lightning invoices through QR codes or Lightning invoices. The wallet has 3,000 downloads.

Bitcoin Lightning is an SPV BIP37-based wallet developed by Anton Kumaigorodski. It features full Lightning Network support that provides for both on-chain and off-chain network transactions and is available in both testnet and mainnet. Processing is local for both on- and off-chain transactions. Users can send and receive bitcoin almost instantly through dedicated channels. One unique quality of this wallet is that it uses a system of storage tokens to store channel backups and delay refunding transactions anonymously. It has 71 reviews on Google Play, but the exact number of downloads is unknown.

Rawtx, short for “raw transactions,” is a mobile Lightning Network wallet for Bitcoin that allows users to send and receive testnet bitcoins on the blockchain and Lightning Network. The wallet is available for Android and an iOS version is in development.

LND Thin Wallet enables users to send and receive Bitcoin privately and instantly from a mobile device with the “thin” Lightning wallet, which connects to an LND node the user is running on another device. In addition to allowing users to send and receive Bitcoin over the Lightning network, this app allows them to view transaction and channel details, open up new channels, and deposit Bitcoin to their Lightning wallet.

New LN Channels

Professional Bitcoin influencer @ArminVanBitcoin posted on Twitter a little over a week ago pointing out progress in other areas of the project – the network capacity has grown to 40 BTC (the total value of the Bitcoin being spent on the Lightning Network).

While it’s early days, the recent figures do show some promise and definite growth for the scaling solution.

The influencer also posted some of the other progress given to him by the developers recently, listed below:

– 200K+ onchain txs / day

– 44% of transactions use

– Mempool cleared, 1 sat/byte fees

– 2MB+ blocks being mined

– 37 Ehash/s hashrate ATH

– 9500+ lightning channels

– lightning wallets for iOS + Android

– sub-satoshi offchain fees

– Schnorr Sigs BIP

Drawbacks and Obstacles

The Lightning Network has come leaps and bounds since its conception three years ago. While its not running at a capacity sufficient for widespread adoption, it’s already in use with launched apps and active nodes operational.

However, the system is not without its problems and there are a number of concerning issues that ideally should be overcome before the network goes fully live.

It recently emerged that the Network is very centralized, despite the fact that it was created as a more complex but decentralized alternative to increasing the block size. Bitcoinist reported that the 220% spike in the network activity seen recently was actually the work of just one person, Andreas Brekken who is a supporter of Bitcoin Cash advocate Roger Ver.

Prior to Brekken’s node going live, the entire Lightning Network had a capacity of only around $225,000, with Brekken now comprising 49 percent of total network capacity at $427,000.

Given that Ver is an outspoken advocate of larger block sizes and a critic of the Lightning Network, believing it to be simply a mechanism by which to profit from an inherently decentralized and un-monetized cryptocurrency network, there are now concerns that the spike is the result of an effort to harm or control the Lightning Network at a crucial stage in order to discredit its use case.

The recent news comes on top of general issues surrounding a lack of adoption and real-life scalability – however, if the Network can become more centralized and the developers maintain the current rate of progress, it’s possible that Bitcoin will have a real scaling solution very soon.

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Interested in other cool crypto posts….check out What happens when the last Bitcoin is mined?and The Price of Bitcoin vs Cost of Mining.

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