Today we’ll talk about the Lightning Network, one of the next big developments for Bitcoin. While Bitcoin’s price is finally receiving some love, is lightning going to strike?
Back in the early days of Bitcoin, the developers saw that the standard blockchain wasn’t big enough to handle everyone’s transactions. To solve this problem, some of them decided to attach a new payment network to Bitcoin-one that was faster and cheaper than the main blockchain.
The Lightning Network uses Bitcoins, but it operates on a completely different principle. Instead of waiting for transactions to be mined, users simply exchange vouchers, like an IOU, which is an informal document that acknowledges a debt that’s owed. The system is optimized towards micropayments, so the fees were designed to be tiny. Using the lightning network, you can send someone less than a penny, but for large payments, you better use the main blockchain.
The Lightning Network has also got some problems. One of the main criticisms of the system is that you can send at most a few hundred dollars at a time. That should improve as the network gets bigger, but you won’t be using it for anything big. Speaking of users, there aren’t that many of them. The total capacity has now reached two million dollars, but that’s nothing compared to Bitcoin’s 60 billion dollar market cap. With these figures, it will be a long time before you can shop at Starbucks (NASDAQ:SBUX) with Bitcoin.
