During the Bitcoin Wednesday conference held on 1 November 2017, one of the world’s authorities on the Lightning Network, Christian Decker, talked about the peer-to-peer micro-payments platform that focuses on resolving the scalability issue of Bitcoin.
In a presentation titled “Buying Coffee at Lightning Speed”, he covered some subjects such as Bitcoin’s scalability issue, how Bitcoin transactions work, and reasons why we might never really be able to scale Bitcoin, or other blockchains. He then went on to suggest how the multi-sig micropayments solution Lightning Network can be used to address scalability in Bitcoin, and increase the number of transactions per second. Christian explains:
“We solve the scalability issue by using a P2P micro-payments channels or executing most of the transactions off chain, not confirming them anymore on the blockchain itself. In the case of micro-payments, the idea is to create a persistent relationship between two end points by creating a shared account, and transacting between the two parties, without letting a decentralized ledger learn about the intricacies of each transaction.
So what we are trying to do is we create a shared account, and negotiate how we split these funds once we close the channel. And we want to do this iteratively, so we can incrementally pay or get money back. Once we feel that we won’t be coming back to this receiving party, we can ask the receiving party to close the shared account’s payment channel and receive what is left in the balance. In the meantime, the micropayments channel can register this transaction on the blockchain.”