27
Twitter wants to integrate Bitcoin Lightning Network into its platform. Some people believe Lightning Network is the future but others doubt it.
To integrate Lightning Network, Bitcoin can make transactions faster and cheaper.
Before diving into Lightning Network, let’s see what it actually is.
What is Lightning Network?
It is a Bitcoin layer 2 solution that facilitates transactions off the blockchain.
Blockchain is very slow
What causes blockchain to slow is the verification process that miners carry over through. The process not only needs to process transactions, earn incentives, verify the transaction, and broadcast at the public ledger. When traffic becomes congested, the process is costly and inefficient.
Scalability is important
Bitcoin can transact 7 payments per second compared with 24,000 from Visa, the credit card company. Who will want to use the technology 3,500 times slower than the current system even if it is secured?
How does credit card payment work?
The credit card payment system is a fiat currency layer 2 solution. When you have a credit card to pay your purchase, your money did not directly pay off through the system. What it did is to process the transaction records after a certain period of time for settlement. However, credit card companies will verify both parties’ identification and the purchase agreement on each transaction.
Lightning Network similar to credit card payment process
Lightning Network resembles how a credit card works with only records of transactions until the final settlement of all payments ready to only broadcast one final transaction into the blockchain.
Different from credit card
Within the Lightning Network, all parties will create a channel with multi-signature wallet login and deposit into the account that all parties will start transactions until all parties completed transactions and closed the channel.
Some disadvantages of Lightning Network
There are 3 concerns over the Lightning Network:
-overall costs
-security concerns
-price fluctuation
Overall costs
There all multiple costs include open and closed channels fees, routing fees, and blockchain process fees.
The concern is that overall fees may be higher than the process through the blockchain.
Security concerns
Since it requires nodes all available online, it increases the possibility of hacking.
Price fluctuation
As Bitcoin price fluctuates, all transactions settle may lose what they were before.
Spamming in Lightning Network can tank the system too
If hackers spammed the system by sending multiple transactions and increased the network process fees intentionally, the system may become congested and costly.
Fast adoption
Despite many concerns over Lightning Network, many companies jump ahead to adopt it because it is definitely a possible solution to choose. However, the security of the system may still need to be tested before fully functioning.
In conclusion
Lightning Network is a possible solution for Bitcoin scalability. However, security is really a concern that will be very costly for the network to be attacked.
Photo by Micah Tindell on UnsplashRelated articles:
Stablecoin is Not So Stable
CBDC: Stablecoin 2.0 or Stablecoin Killer
Chinese CBDC: the Ultimate Financial Weapon or Just another Copycat
DeFi Swap: Great Returns come with Great Cost
CBDC vs Cryptocurrency: the War of Privacy
Game of Three Kingdoms: CBDC vs. Cryptocurrency vs. TechCoin
Gold vs. Bitcoin: Digital Twin or Enemy
Volatility of Bitcoin: Threat or Opportunity
Lesson Learn from Robinhood IPO: Era of Crypto Exchange Comes to an End or a New Beginning?
Hypothetically, What if the Fed Fails to Control Inflation, Will Crypto Save Us?!
Stablecoin: We Ever Need Them More Than CBDCs
SEC vs. Ripple: the Endless Game of War
SEC vs. Defi: What is the goal of the Defi?
City Coins: Are they the Era of New Coins?
Ethereum London Hardfork: How Hard does It Actually Fork?
Did the U.S. government just thumbs up on Bitcoin and down on Ethereum after the London Hardfork?
The End of Era for Crypto Exchange Platform?!
NFT: Digital Solution or Delusion?
NFT: The Future of Gamers' Assets
Is Bitcoin Untraceable Anymore?! It Depends!
Why Crypto Got So Political Suddenly: The Beginning Tale of Government Crypto Surveillance Program
Where are We Position Crypto at : the Problem with Money and Wealth
Crypto Hacking: How Did it Really Happen?
Bitcoin Mining Recover?! The Chinese vs. The U.S Strategy of Blockchain
The Legendary of Shitcoin: Meme to the ?? or Unique of ?? or Simply just ??
Crypto Economy: the Untold Speculative Financial System We will Live?
Red Alert: Lesson Learns from the Nearly Cashless Nation
Jack Dorsey’s Ambitious: Twitter wants to Become a Place of Freedom of Speech
What Categories Does Bitcoin Belong to or Does it Really Matter?
Quantum Financial System: The System Lost Itself in Quantum World
Doge 2.0: Who Let The Dog Out?!
Legendary Hacker: the White Hat into the Rescue
Crypto Hot Hub: The Best Place to become Crypto Incubator
EIP-1559: The Future of Ethereum Economy
Robot Sucks: How Lousy Jobs AMMs Did to Ruin the DeFi
The Future of Cardano: as Clear or as Uncleared?
We Are Short for the Dollars: The Dollar's Liquidity Issue
Currency Comparison: Bitcoin vs Dollar
Patent the Blockchain: the Nonsense Action Shows a Worry from Big Tech Companies
Forget about Trade War: New Era of the International Trade
Ethereum Got Update Bug: A Blockchain Synchronization Problem
CBDC's Cross Border Payments System: Worse than Crypto
Bitcoin's Energy Concerns, Scalability and the End of Bitcoin Prediction
Unknown Author’s Hypothesis: Creator of PoW and PoS Hybrid Blockchain
Currency Debasement: Cryptocurrency Inflation Hedge Hypothesis Still Hold
Shitcoin Economy: Part 1 - Category
NFT Bubble: Does it Really Matter ?!
Shitcoin Economy: Part 2 - Regulations
Fiat vs. Crypto: Religion vs. Science or Vice Versa
Dogecoin 2.0: Doge Breeder Era
Shitcoin Economy: Part 4 - Technology
Buterin's Regret: Ethereum 8 Co-Founder Things
Tokenism: An Old Idea Get A New Invention
Shitcoin Economy: Part 5 - Detokenization
-------------------------------------------------------------------------------------Disclosure: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose cryptocurrencies are mentioned in this article. This information is only for educational
