While Bitcoin has seen dramatically wider adoption over the past year, two of the cryptocurrency’s biggest issues — falling throughput and latency — are still unaddressed. Those problems make Bitcoin difficult and somewhat expensive to use in day-to-day transactions.
A few moments before the opening of the Bitcoin Wednesday conference on 1 November 2017, Blockstream’s Christian Decker, one of the world’s experts on the Lightning Network, spoke with Rik Esselink, European MD or connected home startup, Ring.com. Lightning is a peer-to-peer micro-payments technology that tackles Bitcoin’s scalability issue, allowing for instant, low-cost transactions and considerably reduced network congestion.
Christian explained:
“When I first read the Bitcoin paper, I kind of found it amazing that it could actually work because if I buy a coffee using Bitcoin, its transaction is going to go around the world where everyone can see and verify it. But then it also means if every single node needs to verify every single transaction; the node with the least capacity is the bottleneck of the entire system. So either you scale up the requirement of the node which can be done up to a certain limit, or you come up with something completely different.
With Lightning Network, we can address two big dimensions of Bitcoin’s scalability issue i.e throughput and latency, with high level protocols built on top of Bitcoin by removing the need for everybody to see every transaction. In Lightning Network, we establish a payment system, called a channel, between two endpoints, which is basically a shared multi-sig account. Every transaction needs a signature from both parties in order to complete the transaction. To close the channel, you need the latest version of the settlement in order to broadcast it to the network.”
Christian Decker’s profile is here.