Hey Jessecond layers
I've made no secret that I am heavily biased towards Bitcoin, I feel it is the standard, and anything that wants to compete with it needs to be 10x better even to consider taking away some of my attention. Granted ETH has blazed a trail and made a lot of marketing noise, the work going on in the Bitcoin space tends to fly under the radar.
Bitcoin development is NOT sexy; it's pretty geeky, it's not all that innovative when we look at the ideas and implementations of other coins. What the Bitcoin community does do, is take steps to add to its network effect methodically and I can appreciate that approach.
Build it once and build it well, then you can layer on all sorts of applications once that foundation has been laid.
Layer cake
One of those layers has been the lightning network, which I've actively been playing around with for some time, and while not many are using it.
I can see the potential in what it can offer, as a solution that absorbs some of the really good ideas surfacing in the wider crypto space.
I've spoken about LI-FI/Lightning Pools, Stable coins, Smart contracts, Dapps on Lightning and while those are cool, and solve a few pain points in the future, one of the biggest pain points for me was moving between the main-chain and the lightning network.
Opening up a payment channel
One of the biggest pains for me has been opening up payment channels, so with the lightning network, you have to set up a new lightning wallet separate from your Bitcoin wallet.
Let's say your Bitcoin wallet is like a savings account, whereas your lightning wallet is your day to a day chequing account. So you'll need to move some of your funds to the lightning wallet to use every day or when you need it.
Like some banks that charge inter-account transfer fees, Lightning was subject to on-chain fees. So when you create a payment channel/lightning wallet, you send your Bitcoin to this new wallet you own and have to pay on-chain fees.
If you ever want to close the wallet/payment channel, again you need to secure it on-chain paying fees once again.
However, once the payment channel is opened, a user can send bitcoin payments almost instantaneously and at a fraction of the cost.
As you can tell, this doesn't help if the network is clogged with transfers in the mempool and could cost you a fortune as competition for block space increases.
The on-ramp into Lightning still had a bottleneck, but now it looks like a solution is on the way in the form of lightning loops.
The lightning network goes loopy
Normally, these payment channels are set up by users with a fixed capacity and need to be topped up to facilitate bigger transactions. The new loop out feature Calling it the “Loop Out” / “Loop In” feature will enable a payment channel refills with “on-chain" bitcoin source such as wallets or exchanges.
Now that payment channel liquidity has been sorted and the idea of lightning pools combined with the added value the main chain is gathering it's only a matter of time before these channels are well funded and ready to be used in daily transactions, making the satoshi more user friendly and extracting more value out of Bitcoin for the ordinary user.
Sources:
Have your say
What do you good people of HIVE think?
So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."
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