The lightning network has provided a way to expand the utility of digital currency without having to slow down the main chain.
A recent update to the lightning network, that is still currently in the testing phase gives users the ability to send transactions across the various blockchains‘. The development team over at Lightning Labs have been able to succesfully swap testnet bitcoin, for testnet litecoin through a lightning channel this past week.
What happened in this swap?
There was a transfer in ownership of the coin but the transaction was not witnessed or recorded or on either blockchain.
Charlie Lee, creator of litecoin, reportedly told Bitcoin Magazine “Previous atomic swaps that I have done were on-chain, and had the on-chain limitations of slow [transactions] and high transaction fees” when talking about a way that one could use in the past to exchange different sorts of coins in a trustless manner. “Off-chain atomic swaps are significantly better. They are instant, [have] low fees, and better protect one’s privacy.”
What does this test mean?
There is now great potential for a way to have trustless cryptocurrency exchanges, very close to seamless mutli-coin payment processors and many more aspects. The lightning network contributes to a couple of increases to the quality of the user experience through several components.
Instant Payments – lightning-fast blockchain payments without worrying about block confirmation times. Where security is enforced by blockchain smart-contracts without creating an on-chain transaction for individual payments. Payment speed measured in milliseconds to seconds.
Scalability – Capable of millions to billions of transactions per second across the network. Capacity blows away legacy payment rails by many orders of magnitude. Attaching payment per action/click is now possible without custodians.
Low Cost – By transacting and settling transactions off-chain, the Lightning Network allows for exceptionally low fees, which allows for emerging use cases such as instant micropayments.
Cross Blockchains – Cross-chain atomic swaps can occur off-chain instantly with heterogeneous blockchain consensus rules. So long as the chains can support the same cryptographic hash function, it is possible to make transactions across blockchains’ without trust in 3rd party custodians.
The highly anticipated lightning network provides for the second layer which will be laid on top of bitcoin. It will be an open protocol and the network also allows for simple integration with btc forked cryptocurrencies such as bitcoin cash and lite coin.
What can the lightning network achieve?
If the lightning network operates on various blockchains then the chains can very likely be connected together. So, if a few people on a network are interested in taking one sort of coin and forwarding another, it would be possible to send btc on one side of a channel that will result in the equal amount of ltc on the other side.
Lee, stated earlier this year that he supported the segregated witness soft forks on litecoin and bitcoin because it would allow for the creations of these sorts of bridges which would make experiences more seamless.
The simple idea behind the Lightning Network, is that not all transactions are required to be recorded on the Blockchain. Allowing for speedier transactions and that the latest tests will allow for further transaction ability across blockchains.
See it in action below!
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Read more about it on their blog.