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Reddit User Claims First Transaction on Lightning Network

lightning pic

A Reddit user claimed the first item purchased using the Lightning Network, a proposed solution to Bitcoin’s scaling issues.

“I used Lightning Network’s mainnet [sic]… …to purchase an AR300M VPN Router through TorGuard” posted the user.

The Bitcoin community applauded the achievement, which marks a significant step towards overcoming Bitcoin’s scaling dilemma. The transaction came after a Tweet from TorGuard asking the community to contact their technical team to test their new Lightning Network payments.

The slow giant

Bitcoin was designed to be censorship-resistant, decentralized, and immutable. The trade-off for designing such a robust digital currency is speed and scalability. The Bitcoin community knew for years that in order for it to be adopted widely, it would need a scaling solution.

An influx of new users came into the ecosystem in recent months, as we grow nearer to wide-scale adoption of digital currency. The new users brought with them an increased demand for the network resources, which created a transaction backlog and increased fees.

The Lightning Network (LN) may have arrived just in time to save the day.

An open payment channel

The theory behind the LN existed for some time, but we are only just now seeing tentative steps taken to implement the scaling solution.

The Lightning Network creates a payment channel between two users. The transactions that occur on that payment channel, though, only record on the blockchain after it closes. This allows for the users to make multiple transactions quickly and only pay one transaction fee.

Once a payment channel is open other user’s transactions can piggyback through multiple payment channels without additional fees. Ideally, this will create a network of payment channels that could process transactions off of the blockchain and unclutter the currently overworked Bitcoin network.

Working out the bugs

There are currently around 100 active Lightning nodes on the Bitcoin network, which is nowhere near enough to solve the scaling issues.

Like any other new technology, the Lightning Network is sure to have bugs that won’t become apparent until it is fully operational. For now, people should proceed with caution before using the Lightning Network.

Heard of potential ‘money-losing’ bugs with c-Lightning (which Torguard uses); please be careful out there folks!” warned the Reddit user who completed the first Lightning Network transaction.

This prompted TorGuard to provide a disclaimer stating they would cover any funds lost while testing the new system.

Atomic swaps

Many digital currencies face scaling issues and look to the Lightning Network as a solution.

Litecoin plans to adopt it, as well as a number of other altcoins. Once they have implemented Lightning Network, funds can easily be sent across the blockchains in what’s called Atomic Swaps.

The technology uses built-in decentralized exchanges so that a person could, for example, make a payment in Bitcoin using the equivalent value of Litecoin.

What’s next for the Lightning Network?

Whether or not the Bitcoin community fully embraces the Lightning Network is yet to be seen. For now, many digital currency users are relying on faster altcoins to send funds. Altcoins also chip away at Bitcoin itself. Given the rise of altcoins, the marketplace dominance of Bitcoin fell in the past month from 62% to 32%.

This shift in dominance brought with it a big price rally in the altcoin marketplace. If implemented fully the Lightning Network may change all of that, pushing Bitcoin’s dominance back to previous levels.

The Lightning Network has some of the greatest minds in the blockchain industry focused on its potential. With that amount of brain power, there’s a good chance the team can overcome major obstacles to widespread adoption.

 

Image credit: Wikimedia Commons

 

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