When it comes to cryptocurrencies like Bitcoin, the more users involved in the network, the more secure and usable the network becomes. More users increases liquidity, as well as overall prevalence of the coin so that it will more likely be adopted by businesses. However, getting over the hump of an early adopter phase has proved to be difficult for even the most widely known and used coin, Bitcoin. Most consumers just want to be able to be able to spend money the same way they always have, and do not value the other beneficial aspects of the technology enough to adopt new ways of spending.
The Bitcoin Lightning Network has been posed one of the best possible methods to reach this majority consumer, to give them a form of cryptocurrency technology that has much of the best of both worlds. Lightning network is a secondary layer on top of the Bitcoin network which allows transactions to be processed almost simultaneously, rather than the extended periods of time it can take for a standard Bitcoin transaction to process. In times when Bitcoin’s activity was soaring in late 2017, transactions sometimes did not validate for hours.
“Lighting channels are like tubes of money … Money moves around in the tube, but the total amount of funds remains constant. So, unlike other payment systems, Lightning requires ‘inbound capacity’ in order to receive funds.” - Lighting Labs developers Alex Bosworth and Bryan Wu
There are several organizations which focus on development of the Bitcoin network, such as Blockstream, Bitcoin Core and Lightning Labs. Blockstream was originally behind the development of the Lightning network, but most recently, Lightning Labs has recently a substantial improvement to how it functions.
The lightning network is like a continuously moving stream of Bitcoin transactions. In order to receive a payment with it, you must have an outbound transaction to balance it. In order to send a payment, you must have an inbound transaction to balance it. This process maintains the liquidity needed to maintain the benefits of the network. However, Lightning Loops allow for a new way to interact with these payment channels.
“We believe Loop will contribute to the efficiency, scalability, and usability of Lightning. We encourage any Lightning developers, testers, and enthusiasts to begin trying Loop today.” - Alex Bosworth and Bryan Wu
The “Loop Out” and “Loop In” features enable payment channel refills. These BTC refills can be made from any on-chain bitcoin wallets or even an exchanges.
By: BGN Editorial Staff