How Fast Is Bitcoin Lightning Network

“Layer 2” payment protocol that operates on top of a blockchain-based cryptocurrency

Lightning Network Protocol Suite

Example ACFKLQ routing through an idealized mesh network of payment channels.

The
Lightning Network
(LN) is a “layer 2” payment protocol layered on top of Bitcoin (and other blockchains and cryptocurrencies).[1]
Information technology is intended to enable fast transactions amidst participating nodes and has been proposed as a solution to the bitcoin scalability problem.[2]
[iii]
It features a peer-to-peer organisation for making micropayments of cryptocurrency through a network of bidirectional payment channels without delegating custody of funds.[iv]

Normal use of the Lightning Network consists of opening a payment channel by committing a funding transaction to the relevant base blockchain (layer 1), followed by making whatsoever number of Lightning Network transactions that update the tentative distribution of the channel’southward funds without broadcasting those to the blockchain, optionally followed past closing the payment channel by broadcasting the final version of the settlement transaction to distribute the aqueduct’southward funds.[5]

To settle the payments the aqueduct must be closed. To initiate this process 1 node broadcasts the well-nigh up to engagement settlement transaction to the network. The next events tin can broadly exist thought of in two means, a cooperative closure in which both parties confirm a distribution and funds are immediately settled and an uncooperative closure. Uncooperative closes may exist legitimate for example if i node is no longer part of the network or fraudulent with i node broadcasting an outdated, incorrect distribution. In uncooperative closures the funds are not settled instantly but there is a dispute period inside which nodes may contest the broadcast distribution. If the second node broadcasts a more up to appointment distribution then the funds are transferred entirely to them. This punitive act, known as the alienation remedy transaction, prevents nodes from attempting to defraud the network by broadcasting out-of-appointment transactions.

History

[edit]

Joseph Poon and Thaddeus Dryja published a draft of the Lightning Network white paper in February 2015.[vi]

Lightning Network has been endorsed by mobile payment entrepreneur Jack Dorsey.[7]

2017 First Lightning Transaction On Litecoin

[edit]

On May 10, 2017, Christian Decker of Blockstream fabricated the first full, secure Lightning payment[8]
on a not-test network, and the start Lightning payment on Litecoin, sending a microscopic payment not usually possible or economical on a blockchain, fully settled in a fraction of a 2d.[9]

2019 Bitcoin Lightning Torch

[edit]

On January xix, 2019, pseudonymous Twitter user hodlonaut began a game-like promotional examination of the Lightning Network by sending 100,000 satoshis (0.001 bitcoin) to a trusted recipient where each recipient added 10,000 satoshis ($0.34 at the time) to send to the next trusted recipient. The “lightning torch” payment reached notable personalities including Twitter CEO Jack Dorsey, Litecoin Creator Charlie Lee, Lightning Labs CEO Elizabeth Stark, and Binance CEO “CZ” Changpeng Zhao, amongst others.[10]
[11]
The lightning torch was passed 292 times before reaching the formerly hard-coded limit of 4,390,000 satoshis. The final payment of the lightning torch was sent on April thirteen, 2019 as a donation of 4,290,000 satoshis ($217.78 at the fourth dimension) to Bitcoin Venezuela, a not-profit that promotes bitcoin in Venezuela.

2021 Adoption In Republic of el salvador

[edit]

In June 2021, the Legislative Assembly of El salvador voted legislation to make Bitcoin legal tender in El salvador.
[12]
[thirteen]
[14]
The conclusion was based on the success[
commendation needed
]

of the Bitcoin Beach ecosystem in El Zonte that used a LN based wallet. The government has introduced a wallet utilising the Lightning Network protocol while giving the freedom for citizens to use other Bitcoin Lightning wallets.[15]
[
amend source needed
]

Design

[edit]

A Lightning Network overview

Andreas Antonopoulos has referred to the Lightning Network every bit a second layer routing network.[16]
The payment channels let participants to transfer coin to each other without having to brand all their transactions public on the blockchain.[17]
[18]
This is done by penalizing uncooperative participants. When opening a channel, participants must commit an corporeality (in a
funding transaction, which
is
on the blockchain).[nineteen]
Fourth dimension-based script extensions like CheckSequenceVerify and CheckLockTimeVerify make the penalties possible.

If nosotros presume a big network of channels on the Bitcoin blockchain, and all Bitcoin users are participating on this graph past having at least i aqueduct open on the Bitcoin blockchain, it is possible to create a nearly-infinite amount of transactions within this network. The only transactions that are broadcast on the Bitcoin blockchain prematurely are with uncooperative channel counterparties.[20]

The CheckSequenceVerify (CSV) Bitcoin Comeback Proposal details how Hash Fourth dimension-Locked Contracts are implemented with CSV and used in Lightning: BIP 0112.

Implementations

[edit]

Lightning operates under a unified specification called the Bolt (Basis of Lightning Engineering science) specification.[21]
There are four major implementations of Lightning that implement the specification: Lightning Network Daemon, CoreLightning, Eclair, and Lightning Dev Kit.[22]
[23]
[24]
[25]

Benefits

[edit]

There are several claimed future benefits to using the Lightning Network compared to on-chain transactions:

  • Atomic Swap: The diminutive swap was first introduced by Tier Nolan on the BitcoinTalk forums in 2013. Nolan outlined the basic principles for cross-chain cryptocurrency swaps by using simple cryptocurrency trades beyond different types of blockchains. Fast forward to September 2017, diminutive swaps captured the attention of the cryptocurrency community at large when Litecoin founder Charlie Lee announced the successful execution of an diminutive swap between Litecoin and Bitcoin over Twitter[26].
    [27]
  • Granularity: According to Andreas Antonopoulos, some implementations of the Lightning Network allow for payments that are smaller than a satoshi, the smallest unit of measurement on the base layer of bitcoin.[16]
    Routing fees paid to intermediary nodes on the Lightning Network are frequently denominated in millisatoshis or msat.[
    citation needed
    ]
  • Privacy: The details of private lightning network payments are non publicly recorded on the blockchain.[28]
    Lightning network payments may be routed through many sequential channels where each node operator will be able to see payments beyond their channels, simply they will non be able to encounter the source nor destination of those funds if they are non-side by side.[16]
  • Speed: Settlement fourth dimension for lightning network transactions is under a infinitesimal and tin can occur in milliseconds.[16]
    Confirmation time on the bitcoin blockchain, for comparison, occurs every ten minutes, on average.
  • Transaction throughput: In that location are no primal limits to the amount of payments per 2nd that can occur nether the protocol. The amount of transactions are merely express past the capacity and speed of each node.[xvi]

Limitations

[edit]

The Lightning Network is made up of bidirectional payment channels between two nodes which combined create smart contracts. If at any time either party drops the aqueduct, the aqueduct will close and exist settled on the blockchain.[29]

Due to the nature of the Lightning Network’s dispute mechanism, which requires all users to watch the blockchain constantly for fraud, the concept of a “watchtower” has been developed, where trust can exist outsourced to watchtower nodes to monitor for fraud.

Routing

[edit]

In the event that a bi-directional payment channel is not open between the transacting parties, the payment must be routed through the network. This is done using an onion routing technique similar to Tor, and it requires that the sender and receiver of the payment take enough established peers in mutual to find a path for the payment.[30]
In outcome, a simple route would look like this:

  • Bob wants to pay Alice 1 BTC but Bob and Alice don’t have a channel open with each other.
  • Bob does have a channel open up with Carol, and Alice also has a aqueduct open with Carol
  • To route the payment, Bob sends 1 BTC to Carol, and Ballad and so sends one BTC to Alice

The original whitepaper in reference to routing suggests that “eventually, with optimizations, the network will look a lot similar Tier-1 ISPs”.

Utilise cases

[edit]

Cryptocurrency exchanges such as Bitfinex and Kraken employ it to enable deposits and withdrawals.[31]
Laszlo Hanyecz, who gained fame in the cryptocurrency community for paying 10,000 BTC for two pizzas in 2010, bought two more than pizzas in 2018 using Lightning Network and paid 0.00649 BTC.[32]

References

[edit]


  1. ^


    “lightningnetwork/lnd”.
    GitHub
    . Retrieved
    2021-05-04
    .



  2. ^


    Russo, Camila (March 15, 2018). “Engineering science Meant to Make Bitcoin Money Once more Is Now Live”.
    www.bloomberg.com
    . Retrieved
    2019-12-12
    .



  3. ^


    “MIT and Stanford Professors Are Designing a Cryptocurrency to Elevation Bitcoin: Unit of measurement-due east”.
    fortune.com. Jan 17, 2019. Retrieved
    2019-12-12
    .



  4. ^


    Popper, Nathaniel (August 15, 2017). “Bitcoin price surges subsequently deal on software updates”. The Boston Globe. Retrieved
    December 12,
    2019
    .



  5. ^


    Lee, Timothy B. (2018-02-04). “Bitcoin has a huge scaling problem—Lightning could be the solution”.
    Ars Technica
    . Retrieved
    2019-12-12
    .



  6. ^


    “Lightning Network whitepaper 0.5 by Joseph Poon and Thaddeus Dryja”. 28 Feb 2015. Archived from the original on 2015-02-28.


  7. ^


    “Bitcoin toll: What is Bitcoin lightning network – how could it cause Anarchy with BTC price”. Express. 2018-07-06.


  8. ^


    Christian, Decker (2017-05-ten). “Commencement Lightning Network Payment on Litecoin”.
    Twitter
    . Retrieved
    2021-09-30
    .



    {{cite web}}: CS1 maint: url-status (link)


  9. ^


    Russell, Rusty (2017-05-eleven). “Major Milestone: The Showtime Lightning Payment on Litecoin pays from Zurich to San Francisco”.
    Blockstream: Bitcoin and digital asset infrastructure
    . Retrieved
    2021-09-30
    .



  10. ^


    Browne, Ryan (6 February 2019). “Jack Dorsey says the ‘only’ cryptocurrency he owns is bitcoin”.
    CNBC
    . Retrieved
    17 December
    2019
    .



  11. ^


    Hackett, Robert; Roberts, Jeff John; Wieczner, Jen. “The Ledger: Cryptocurrency Custody, QuadrigaCX Quagmire, CEOs Pass Bitcoin ‘Torch’“.
    Fortune. Fortune Magazine. Retrieved
    17 December
    2019
    .



  12. ^


    Aleman, Marcos (9 June 2021). “El Salvador makes Bitcoin legal tender”.
    Associated Press
    . Retrieved
    sixteen June
    2021
    .



  13. ^


    “Republic of el salvador aprueba el uso de Bitcoin como moneda de intercambio”.
    Agencia EFE
    (in Spanish). ix June 2021. Retrieved
    sixteen June
    2021
    .



  14. ^


    “El salvador kickoff country to corroborate bitcoin as legal tender”.
    Agence France Presse. 9 June 2021. Retrieved
    sixteen June
    2021
    .



  15. ^


    @nayibbukele (28 June 2021). “Aclarando la desinformación que están…” (Tweet) – via Twitter.

  16. ^


    a




    b




    c




    d




    e




    Antonopoulos, Andreas (2017-07-21).
    Mastering Bitcoin
    (2nd ed.). O’Reilly. pp. 297–304. ISBN978-1491954386.



  17. ^


    “The Lightning Network Could Make Bitcoin Faster—and Cheaper”.
    Wired. ISSN 1059-1028. Retrieved
    2019-12-12
    .



  18. ^


    “MIT, Stanford Academics Design Cryptocurrency to Better Bitcoin”.
    Bloomberg
    . Retrieved
    2019-12-12
    .



  19. ^


    Burchert, Conrad; Decker, Christian; Wattenhofer, Roger (August 29, 2018). “Scalable Funding of Bitcoin Micropayment Channel Networks”
    (PDF).
    Regal Society Open up Science.
    five
    (8): 180089. Bibcode:2018RSOS….580089B. doi:10.1098/rsos.180089. PMC6124062. PMID 30225004. Retrieved
    17 December
    2019
    .



  20. ^


    “The Bitcoin Lightning Network: Scalable Off-Chain Instant Payments”
    (PDF).
    lightning.network. Jan fourteen, 2016.



  21. ^



    Lightning Network In-Progress Specifications, Lightning Network, 2022-ten-15, retrieved
    2022-ten-15




  22. ^


    Chester, Jonathan. “Your Guide On Bitcoin’s Lightning Network: The Opportunities And The Bug”.
    Forbes
    . Retrieved
    2022-10-15
    .



  23. ^


    Perez, Sarah (2022-01-eighteen). “Cake’due south Cash App adopts Lightning Network for free bitcoin payments”.
    TechCrunch
    . Retrieved
    2022-10-15
    .



  24. ^


    Bambrough, Billy. “Bitcoin’south Lightning Network Is Struggling To Overcome Central Issues”.
    Forbes
    . Retrieved
    2022-x-xv
    .



  25. ^


    Namcios. “What Implementation of Bitcoin’s Lightning Network Should Y’all Pick?”.
    Nasdaq.



    {{cite web}}: CS1 maint: url-status (link)


  26. ^


    “Cross-chain atomic swap with LTC/BTC”.
    Twitter. 2017-09-22. Retrieved
    2021-10-05
    .



    {{cite web}}: CS1 maint: url-status (link)


  27. ^


    Fitzpatrick, Luke. “A Complete Beginner’s Guide To Atomic Swaps”.
    Forbes
    . Retrieved
    2021-10-05
    .



  28. ^


    Ajiboye, Timi; Buenaventura, Luis; Gladstein, Alex; Liu, Lily; Lloyd, Alexander; Machado, Alejandro; Song, Jimmy; Vranova, Alena (2019-08-xiv).
    The little bitcoin book : why bitcoin matters for your freedom, finances, and future. Redwood Urban center, CA: 21 Million Books. ISBN978-ane-64199-050-9.



  29. ^


    Antonopoulos, Andreas; Osuntokun, Olaoluwa; Pickhardt, René (Jan 4, 2022). “How the Lightning Network Works”.
    Mastering the Lightning Network: A 2nd Layer Blockchain Protocol for Instant Bitcoin Payments
    (1st ed.). O’Reilly Media. ISBN978-1492054863.



  30. ^


    Antonopoulos, Andreas; Osuntokun, Olaoluwa; Pickhardt, René (January 4, 2022). “Affiliate 8: Routing on a Network of Payment Channels”.
    Mastering the Lightning Network: A 2nd Layer Blockchain Protocol for Instant Bitcoin Payments
    (1st ed.). O’Reilly Media. ISBN978-1492054863.



  31. ^


    “Why Bitfinex supports the Lightning Network”.
    Bitfinex.com.



  32. ^


    Russo, Camila (Feb 27, 2018). “Crypto Fable Who Bought Pizza With x,000 Bitcoin Is Back At It”.
    Bloomberg
    . Retrieved
    2019-12-12
    .


External links

[edit]

  • lightning.network
  • dci.mit.edu/lightning-network/
  • lists.linuxfoundation.org/pipermail/lightning-dev/ on the Linux Foundation servers



Source: https://en.wikipedia.org/wiki/Lightning_Network

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