In 2015, the white paper appeared with the title “the Bitcoin Lightning Network:
Scalable Off-Chain Instant Payments“. It is a scale that describes the Blockchain for the Bitcoin. The Potential seemed (and seems) limitless: millions of transactions per seconds would be for Bitcoin to be feasible.In January 2018, the Bitcoin Lightning network went live. After an exponential growth, consolidation, and for some months a decrease of the network capacity followed. This gives room for a lot of Interpretation, analysis, but also criticism from the Lightning to the opponent.In this two-part article, we summarize for you the backgrounds, developments and facts, and give our analysis and assessment of the current Situation. Reading to the end will be worth it because there we have a little Surprise Video for you!
Contents
Basics for Bitcoin scaling is a problem
The Motivation for this comes from the fact that Bitcoin is experiencing transactions in the principle of Any-to-it (engl. everybody-need-to-know) based.This means that a Bitcoin-tested Payment, no matter how large or small, of all participants in the network are read, and for the perpetuation of the Blockchain and distributed is stored.In practice, this means a conflict: The more participants in the network, the more transactions, the more communicated, and stored to be verified. Mathematically expressed:
The number of Bitcoin participants is running, so the Communication overhead for transactions is Infinite. The System does not scale in this factor with the number of participants.
This is true for all block chains, which is based on the principle of Everybody-need-to-know. Regardless of the size of the blocks may be on the Blockchain, it will always be a limit and ultimately will not scale.If you look at the development of the daily transactions in Bitcoin, so you can see the border of 400,000 transactions per day by the end of 2017. At precisely the time when the crypto-bubble burst.Chart Bitcoin transactions (source: https://bitinfocharts.com/de/comparison/transactions-btc-sma14.html)
Bitcoin Lightning network as a Savior in time of Need?
Just in time for the Bursting of the bubble by the end of 2017, beginning of 2018, went to the Lightning network, then to the Start. Before that, it was on the Testnet, where the Test-Bitcoin had no monetary value.Important the Lightning network, the fact that there is know way of principle, Everybody-need-to-know the principle Involved-parties-of which (engl. involved parties-need-to-know) goes. This means that in the Lighting network, only the Sender (Alice), the receiver (=Bob) and all the nodes on the Route from the Payment experience. Thus in the network a Route from Alice to Bob, which is about Charlie and Dave, so the communication overhead is constant and depends only on the number of Payments between Alice and Bob. The more participants join the network, the more liquidity is in the System and the more routes between the participants.Mathematically expressed:
The number of Lightning-participants running to Infinity, the Communication overhead for a transaction is constant. The System scales in this factor with the number of participants.
So, it is a by Design scalable System in terms of the performed Payments. As a counter-weight, I would say:
The number of Lightning-participants running to Infinity, so the number of possible routes and the total liquidity to run to Infinity. The System is not scaled to be found in the item is the cheapest Route.
This point is often used by critics of this solution, because in fact, it is not trivial is the cheapest Route in such a network. Cheap can mean, – to find the Route with the lowest fees or the highest Privacy.
Bitcoin Lightning network, and the Boom Phase
To followed the beginning of a Phase of the boom, which I describe here as an Exponential Run-Up in the graph (Jan. 2018 to March 2019).In the graph it can be seen in Green is the accumulated number of Lightning-network stored Bitcoin (left axis) and in Yellow the number of all open Payment Channel (right axis).In March 2019, with more than 1,000 Bitcoin liquidity were present in the network, distributed to over 40,000 Payment Channels. What followed after that?Chart Bitcoin Lightning network (source: https://p2sh.info/dashboard/db/lightning-network?orgId=1&from=now-2y&to=now)do you Want to at one of the world’s leading CFD brokers act? We have for you in our Plus500 Test all of the knowledge about values is collected and written down, where here are the pros and cons are. Just have a look on the Test or see for yourself and join today at Plus500.
Consolidation
It is a Phase of consolidation followed. The number of Bitcoins fluctuates by approx. 1100 Bitcoin and 43,000 Payment Channels.Chart Bitcoin Lightning Network
Correction phase
It now takes the development from the middle of may 2018 to September 2019, and detects a Phase of steady decrease of liquidity, as well as number of payment channels. Currently, the Lightning network is at about 850 Bitcoin total liquidity, and about 36.000 Payment Channel (Sept. 2019).Chart Bitcoin Lightning Network
Fact or FUD – dies the Bitcoin Lightning network?
Many opponents of the 2nd-Layer Lightning network in the steady decrease in the proof of the Badness of the system. This logic is quite simple; in our opinion, she is scratching too much at the surface.Of course, there are other factors to be considered in the context of this analysis. Therefore, we will show you in the next article, what is the impact of Bitcoin’s price development has and how it goes with the Lightning network in the future.The second part will be released this Wednesday, 04.09. In order for you the boredom of not eating until then, we have to pay in the Following a Video on the topic On Amazon with Bitcoin Lightning’. We wish you much fun with the Video. (Image Source: Shutterstock)