Layer two transmission protocol is designed to solve the issue of scalability within the bitcoin network. Until you know about the lightning network, you should be conscious of the main reason for calling the second layer of transaction framework over the bitcoin network. The primary area to be checked was the scaling issue from the outset.
Bitcoin could attach a block within ten minutes of the interval. The scaling problems within the network increased to handle the whole transaction time taken for ten minutes. The necessity arises when people need a faster network to process small payments. Since the visibility rose high every day, the transaction request also grew. Bitcoin either started charging big for a purchase, or start taking more energy, or sometimes the two items that plagued the network.
The idea of a lightning network was proposed by Thaddeus Dryja and Joseph Poon in 2015 in order to achieve a rapid transaction for smaller payments. The goal was to create a better and faster network over bitcoin blockchain without disrupting the parent network. It was also designed to reduce the higher transaction cost, but to allow a fast bitcoin transmission network.
Today, after four years of development and acceptance of the lighting network, it is widely accepted in various fields for small transactions. Specially retail business applause the lightning network for customers’ benefits. And it is working absolutely fine for small payments. Retailers could easily create the channel to accept payments through bitcoin.
The lightning network has expanded at a significant rate last year. Actually, 11,350 lightning network nodes are operating and the network capacity is over 860 BTC. The number of active channels is 35,976, which has risen by almost 79% since last year. From the data provided, you can grasp how quickly the lightning network stretches its wings to the business.
Now, many institutional investors are opening lightning network channel for accepting bitcoin payment in a cheaper and faster way. Large cryptocurrency exchanges are now adding the lighting network protocol to their platform for withdrawing and deposit. For example Bitfinex, Bitbargain, BTCDuke, GetSatoshi.org, FastBitcoins etc. These exchanges allow users to withdraw or deposit BTC without confirming KYC with certain conditions. This service eases the process of transaction in the bitcoin network and solving the scaling problem.
Two peer-to-peer trading exchange also support the lightning network transaction like HodlHodl and Local Lightning. Now as for recent update HodlHodl has paused for the lightning network service for a couple of months. Other than exchanges lighting network also useful for the wallet system. Now the lightning network is used by LNRoute: Mobile Wallets, LNRoute: Desktop Wallets, LNRoute: Online Wallets and LightningNetworkStores: Mobile Wallets.
Phoenix brought a different wallet approach. I’ve added a wallet for the lightning network from the mobile android app. The next business to pursue LN wallet is Nayuta, a full-node hybrid / SPV Lightning app, now in the beta test region.
The aim of building a second layer network is to solve the problem of congestion due to a large volume of bitcoin transaction. Blockstream project on the lightning network is prepared to monitor the issues of Liquid Sidechain development. A new approach has been taken on account of the rush that may escalate as the halving is closer. Halving serves as a mechanism for the rapid growth of the network.
Seeing the high demand in the lightning network, Square Inc. enters the cryptocurrency payment channel. The company headed by Twitter CEO Jack Dorsey has recently acquired a patent for the development of a payment channel for cryptocurrency. The company is working with the lighting network and designing the lighting development kit is for creating a better payment system for faster and cheaper exposure.
When these large industries walk into a project and see the potential for future growth ventures, they can automatically gain recognition. Square’s big announcement would guide the lightning network system to further build and improve the mass acceptance ability of bitcoin payments. Square Inc. stated,“ with the support of developers like Acinq, Blockstream, Lightning Labs, and open-source developers everywhere, it’s only a matter of time until instant, low-fee bitcoin payments are as common as cash used to be.”
https://www.coinbreze.com/
Telegram: https://t.me/coinbreze
Twitter: https://twitter.com/coinbreze
Facebook: https://www.facebook.com/Coinbreze