The Lightning Network – A Game Changer For Bitcoin Scalability
Bitcoin is the first ever cryptocurrency which was released in 2009 by one or a group of anonymous developers, who go by the name ‘Satoshi Nakamoto’. Since the inception of the coin there have been many underlying issues that have posed a challenge for its future acceptance. With Bitcoin’s popularity, several other cryptocurrencies and altcoins made their way into the market and grabbed the attention of people who want to invest in ‘the next’ Bitcoin.
Bitcoin is still the king of cryptocurrency world, with the largest market cap and value of over $15,000 per coin. However, scalability and transaction speed have been limiting adoption rate and use for new users. More and more investors are entering Bitcoin every single day, and popular exchanges are adding thousands of accounts of new users on a weekly basis. With so much congestion and traffic on the network, things are bound to become slow. The time it takes to verify transactions increase as more users enter the space and the network becomes clogged. In peak time, it can even take several hours or even days which is not feasible for those using bitcoin as a currency. It would be impractical to wait for hours to purchase a cup of coffee using Bitcoin, so scalability and transaction speed is a growing issue for Bitcoin network.
Where Visa and MasterCard perform millions of transactions in an hour, Bitcoin is only capable of handling a few thousand. To ensure that your transaction is verified in a timely manner you need to pay a higher fee. Over the past few years this ‘fast transaction fee’ has grown from a few cents to over $10. As more and more users join the network and transaction volume grows, these fees will continue to increase until network scalability is addressed.
Lightning network is a proposed solution to the slow and expensive transaction. The lightning network will enable bitcoin transactions to be confirmed almost instantly, and with a very low transaction fees. This improvement will vastly increase the transaction capacity of the Bitcoin network and eliminate the outrageously high fees users have been paying this year. Lightning network has currently only been tested on a small scale but its future release has the potential to on ramp new investors faster than ever before.
With this small successful test, developers are realizing they need to implement lightning network in their own systems. The next step from here will be release of Beta version of the software, which will give the users of Bitcoin the ability to speed up their own transactions and reduce costs of using the network.