For a better grasp of the potential of Bitcoin and the Lightning Network, its scalability layer, check out the Diamond Hands report. Lightning alters the payout if Bitcoin alters the character of the currency. Will the issues of censorship and deplatformization continue to influence the web tomorrow?
Bitcoin: reinventing payments from the monetary revolution
Lightning is revolutionizing the payment industry, even while Bitcoin is frequently portrayed as a currency and hence a potential store of value due to its governance system that ensures absolute scarcity. Bitcoin’s scalability layer, Lightning Network, exponentially increases transaction throughput.
Because they disregard decentralization and failure resilience, several blockchains, such as Solana or Cardano, claim to have a high transactional throughput. On the other hand, Lightning is a very effective payment system: safe, quick, affordable, and largely private.
An onion is like bitcoin.
The current design of Bitcoin is very interesting from an intellectual perspective. The protocol is constructed using a series of layers, just like the internet. In fact, when computers first started interacting with one another, they employed various protocols for communication. The four-layer TCP/IP paradigm, each of which operates independently, gradually came to be accepted as the norm.
The benefit is that developers don’t have to worry about compatibility issues as they work and specialize on each layer. Lightning can thus reduce errors and defects thanks to its elegant architecture.
A network layer, a message layer, a peer-to-peer layer, a routing layer, and a payment layer are among the layers that make up Lightning Protocol Specifications (BOLTs).
Magic shop
Like Bitcoin, Lightning is based on economic incentives and the premise that people will continue to be greedy in the future. Through transaction routing fees, users are enticed to maintain the system. Network participants are encouraged to look for business prospects by this economic incentive.
The payment routing costs that will be charged for each channel may be determined independently by each node. Payers, on the other hand, typically select rapid payment paths that reduce overall fees.
In conclusion, the Lightning Network’s open competition among routing nodes encourages effective capital allocation and competitive rates. The fundamental properties of Bitcoin—their resilience to censorship and privacy—are logically protected by the market.
Proprietary technology
Due to the usage of onion routing, lightning payments also provide a high level of secrecy. The identity of the sender and the final recipient of the payment cannot be distinguished by routing nodes due to this concept.
This has the impact of making assaults and censorship on certain nodes more challenging in addition to the obvious privacy benefits.
Is lightning centralized or not?
Despite the fact that Lightning is ostensibly decentralized, some nodes with a lot of liquidity have good geographical connections. As a result, they are more involved in the payment route. Because these hubs make it easier to divide the network into different segments, there may be ramifications for privacy and censorship resistance.
But there are other programs to address these problems, including the protocol PeerSwap that maximizes channel capacity.
Excellent organic growth
The network’s public capacity is a significant (albeit unreliable) indicator of Lightning’s development. Theoretically, this shows an increase in network demand for payment routing.
This capacity has grown by almost 150 percent in just five months, indicating healthy organic growth. Users who access the network to transact rather than being drawn in by an impermanent payout in yet another “Super Ponzi Do Kwon DeFi protocol.” For those who are unaware, the majority of DeFi initiatives raise their TVL by luring investors with yield in the form of tokens.
This rise has been significantly influenced by El Salvador’s decision to accept bitcoin as legal money.
Beware, Western Union!
Stablecoins might cause a serious upheaval in international money transfers if Lightning Network and Taro technology were to offer them. Lightning may be pushing Western Union into extinction with its excessive rates for sending money abroad, which average 6.4 percent.
Better yet, I’ve never liked this corporation with their overwhelming lineups.
The fact that El Salvador’s economy relies heavily on transfer money is really one of the reasons behind the adoption of bitcoin there. twenty percent
Additionally announcing intentions to incorporate Lightning are well-known online payment and commerce companies like Stripe and Shopify. Lightning Network payments are projected to gain more popularity as a result of its lower rates, rapid settlement, and lack of chargebacks.
The age of micro-jobs paid in satoshis after uberization?
Another rising-in-popularity use case for the Lightning Network is giving out modest sums of bitcoin as rewards. The near-zero fees on Lightning allow for the transmission of small sums, which lowers the minimum payment threshold for microtasks.
Another use case that is gaining ground is creator donations.
The most well-known instance is podcast streaming, in which users pay in-app fees to keep listening to a podcast. Smaller, in-person tips are also possible because to minimal expenses. For a genuine and engaged experience, liquid and seamless payments.
Bitcoin’s actual DeFi?
The fact that all transactions using Lightning are peer-to-peer is one of its key characteristics. Peers can thus theoretically agree to carry out intricate financial operations that go well beyond straightforward Bitcoin transfers. Along with anonymity, privacy benefits are essential for financial applications.
Decentralized exchanges have arrived.
A type of Bitcoin smart contract called a submarine swap enables secure trading of BTC on Lightning for other tokens. Lightning’s fast conversion enables traders to lower counterparty risk by holding fewer items on exchanges.
The most significant advancement in Lightning was the DLC?
DLCs (Discreet Log Contracts) are a mechanism that enables peer-to-peer, private financial transactions on the Bitcoin network. DLCs provide greater privacy than smart contracts posted on the channel because no one can even tell they are there.
DLCs on Lightning are thought to be a technology on which prediction markets and even stablecoins would be constructed because they are better suited for short-term trade.
Decentralize and use micropayments to repair the web
Lightning-based micropayments in BTC could be used to decentralize and improve the web. For instance, when utilizing APIs, for payment.
Shorter payment intervals and the delivery of digital certificates in exchange for money are made possible by using Lightning.
Spam can also be avoided by using micropayments. A extremely low fee for submitting comments can considerably lower the profitability of spam because spammers post a lot of messages. Spam on social networks can be decreased with the use of this approach.
Lightning micropayments are already being used by some communities to control how many people may join chat rooms on Telegram and Discord, stop spam, maintain quality, or just charge a membership.
Lightning: a scientific solution to a social issue
It’s time to temper this report’s naive optimism now. We can all see how Lightning has the power to revolutionize the web and payments. The point is not that. But if we only consider technological issues, we are unable to see why Bitcoin is a monetary midget.
Above all else, the issue is societal. It is most definitely not due to a technical deficiency if bitcoin does not yet completely replace the dollar.
Not the what, but the why, sells, instead. Therefore, we may continue to be enthusiastic about even the smallest BIP and detail for hours the technological advancements of Lightning, no matter how little, in the belief that this will be sufficient to spark interest. However, that won’t address the core issue.
Above all, Bitcoin has to be a name, a religion, a sect, a reason why, and a vision for fundamentally altering people’s lives. Developers for Bitcoin are a frequent complaint. This may be partially accurate, but the biggest problem with Bitcoin is the dearth of skilled writers, artists, and marketers.
Developers and venture capitalists will arrive if bitcoin becomes unquestionably desirable, and we will have DLC in 48 hours. even in a day.
Finally, I think Bitcoin lacks a charismatic leader. Bitcoin is lacking a Walt Disney or a Steve Jobs. a person with an understanding of what people want. a guru who hypnotizes us all.
Leadership can be beneficial when the paradigm shift is too significant to be entropic. There is not much time left.
Lightning is a very alluring technology that could revolutionize the payments sector and decentralize a portion of the internet. But let’s be honest: Lightning does not offer a solution to the Bitcoin issue. primarily a social and marketing issue.
