It is no secret that the Bitcoin network has a scaling problem. In fact, as anyone who is remotely versed in the fundamentals of blockchain technology would tell you, blockchains do not scale. Most straightforward scaling solutions have been found compromise network security.
Blockchain's inability to scale securely has somewhat hindered its progress in recent years and it is unable to be performant enough to inspire and accommodate new use cases. There is a consensus among experts that scaling blockchain networks without compromising security can only be achieved with off-chain implementations.
Last week, Raiden Network's Micro Riden, Ethereum's off-chain micro-payment solution was launched on main net. Yesterday, Bitcoin's own scaling solution, Lightning Network was announced to have been tested live on main net.
How Does Lightning Network Work?
Lightning Network utilizes bidirectional payment channels that consist of multi-signature addresses. One on-chain transaction is needed to open a channel, and another on-chain transaction can close the channel.
Once a channel is open, value can be transferred instantly between counterparties, who are exchanging real bitcoin transactions, but without broadcasting them to the bitcoin network. New transactions will replace previous transactions and the counterparties will store everything locally as long as the channel stays open.
The developers of Lightning Network protocol announced version 1.0 RC of the Lightning protocol specification along with a successful cross-implementation test on Bitcoin main net. The Lightning specification was developed by three different teams (ACINQ, Blockstream, and Lightning Labs) and others in the bitcoin community through an open, collaborative process. The implementations were developed with a focus on cross-compatibility.
The implementations being interoperable allows payments on the network to be seamlessly routed without being isolated or incompatible. The tests conducted on Wednesday are the first multihop Lightning payments using real Bitcoin.
The first test used eclair sample application coffee shop, Starblocks, which sells ‘blockaccino', for which the transaction was routed through a c-lightning node. In the second test, a transaction to unlock a blog on Ind's website, yalls.org, was made from eclair's wallet and routed through a c-lightning node.
Earlier this year, Blockstream engineer Christian Decker put together over 70 tests to show that all three implementations are compatible with one another. Last month, Lightning Labs team performed a Lightning cross-chain atomic swap between Bitcoin and Litecoin. Cross-chain swaps on Lightning Network could be possible in the future between any two compatible blockchains.
Founder of ACINQ, Pierre-Marie Padiou noted the significance of the main net test but is keen not to rush into main net release of software,
“This is the Lightning standard we've been working on for more than year. There's been a lot of work from us and from all participants. It's a big milestone. We've been able to make successful payments on the main net that goes all around the world, and which involves different compatible implementations, that's kind of a big deal. It also demonstrates the approach has been very conservative. We're not going to rush anything. “