Consumers who use the Electrum bitcoin wallet will soon be able to support payments using the Lightning Network. To do this Electrum runs a Lightning node and merged it with the wallet’s software. The company announced that it will implement the feature in the next update, but didn’t mention when this would happen.
The Lightning Network is a second layer on top of the Bitcoin blockchain. This layer allows for cheaper and faster transactions. Where a normal transaction can costs 1 or 2 dollars, a transaction on the Lightning Network can be less than a cent. The Lightning Network is still a work-in-progress. Recently node building company Casa said that the Lightning network is ‘still early and reckless’.
Bitcoin is the first utilization of blockchain technology. Over the past ten years blockchain technology has become a lot more efficient. Now there are networks that can handle a lot more transactions per second. If the Bitcoin network ever wants to compete with gold trading or credit card transactions, its network speed needs to ramp up. That’s why the Lightning Network is needed in the first place.
Electrum is one of the oldest bitcoin wallets on the market. Bitcoin users got their hands on the first version of the wallet in November 2011. Instead of downloading the entire blockchain it only stores a part of it, hence the term ‘light wallet’. Electrum’s support for the Lightning network is going to make it easier for many users to use the network for transactions. The question is: who will use bitcoin to pay for a cup of coffee?
Lightning still in its early phase
What the Lightning Network does, is creating a temporarily communication channel between two parties. Here these two parties can make as many transactions as they want. Only after closing the channel, the outcome of these transactions will be communicated to the Bitcoin network.
Because the Lightning Network works on top of the Bitcoin network, it can’t use the security that Bitcoin has. The bitcoin miners are only there to check on transactions on the bitcoin network. This is one of the reasons why it’s recommended to only use the LN for smaller transactions.
Even though the Lightning Network is an addition to the Bitcoin network, other cryptocurrencies can also use the tech. Among those currencies are Stellar, Litecoin, Zcash and Ethereum. There have also been tests using atomic swaps; allowing transactions from bitcoin directly into litecoin or other currencies.
True usage and mainstream adoption of the Lightning Network might still be a couple of years away. In August programmers found a major bug, allowing users to basically fake transactions and make money that way. The Lightning Network developers fixed the bug silently, and they revealed it later on. When the software is stable, it can provide a solution for Bitcoin’s scalability issues. More about the Lightning Network can be found on its official website.
Lightning Network and bitcoin experiments
Because of the way the Lightning Network works, tinkerers and inventors have been playing with the technology quite a lot. In March an entrepreneur from Canada managed to send a bitcoin transaction over the lightning network using radio waves.
Five years ago a Finnish software specialist setup a radio station transmitting blockchain information. The project was called Kryptoradio. This would potentially allow offline devices to confirm transactions and provide services to customers, for example a vending machine. The project never became a commercial success, but it shows that there are ways for radio and crypto to combine their forces.
The Lightning Network also makes smaller payments possible. On the normal Bitcoin network a smallest amount is one satoshi, which equals 0.00000001 bitcoin. The Lightning Network allows milli-satoshi to exist. As part of a promotion for the network an artist sold a piece of art for one milli-satoshi, which equaled $0.000000037 back in December 2018.
Also published on Medium.