During the latest iteration of the ‘Let’s Talk Bitcoin’ podcast, Adam Back, the CEO of Blockstream, talked about payment channels and how they could potentially redefine the way in which blockchain scalability is looked at (in the coming few years). He also discussed some of the prototypes of this technology that have already entered the mainstream and are trying to make crypto technology more accessible for the common man.
Further elaborating on the matter, Black went on to note that:
“The main area of technology that we were thinking of building and forming a business was around the concept of sidechain and Lightning Network hadn’t been thought of yet in detail.”
In The Bitcoin Game #60, @adam3us and I talk about @Blockstream's Liquid Sidechain, plus countless subjects related to: Liquid, Lightning, blockchain assets, digital signatures, light wallets, etc. It took me several listens to absorb all the information! https://t.co/jNnClvxymO pic.twitter.com/YlaaZI62y9
— Rob Mitchell (@TheBTCGame) November 4, 2018
When discussing his company’s immediate as well as long-term goals, Black mentioned that his aim with Blockstream from the start was to establish a company that “revolved around the ideas of side chains and payment channels”. He then went on to add that by 2011, he had realized that the payment channels in existence (back in the day) were quite archaic and thus could not be used to facilitate multiple transactions (or even two way tx’s) simultaneously.
What Are Payment Channels?
Simply put, one can think of a payment channel as being a secondary transaction medium that can be used to relieve some of Bitcoin’s existing scalability issues. As many of our readers may already know, payment channels were first introduced into the blockchain sphere after many crypto users noticed that it had started taking too much time for transactions on the Bitcoin ecosystem to get validated.
Additionally, it is worth noting that payment channels essentially serve to establish an avenue between the sender and the receiver that are functional up until a particular transaction is completed (following which, the wallet balances are updated on the blockchain network).
In this regard, Black went on to say that
“It could certainly be practical for repeat payments and because of limitations, people didn’t really focus on routing through it, and if they had, it would have been possible.”
Lastly, he also mentioned that some of the other developments associated with payment channels have been going on simultaneously for some time now. For example, Black mentioned that independent devs had been working to create the whitepaper for ‘The Bitcoin Lightning Network’ as well as that of ’Duplex Payment Channels’ — both of whom aim to fulfil the same purpose.
On the subject, Black elaborated on the various differences between the aforementioned payment channels by saying:
“I think the differences of the breakthrough of the channels is that they are reversible so you can send money back in the other direction and makes it interesting to do multi-hop routing.”
Rounding off his discussion on the podcast, Black stated that as time progresses, payment channels will become increasingly more popular since they provide customers with possibilities such as “immediate final settlements” and “better privacy”.