Since its inception in 2009, Bitcoin (BTC) has earned various accolades including becoming the leading cryptocurrency used throughout the crypto industry.
It is a decentralized digital currency with no central authority or banks. It can be used for user-to-user transactions on the peer-to-peer bitcoin network without any intermediaries. The transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain. This makes Bitcoin an open-source public domain.
Despite its popularity, Bitcoin came under speculation by crypto critics/experts due to its lack of scalability, transaction processing time, higher fees, and the huge capacity of power it consumes to keep the blockchain going through mining. This led to the development of Bitcoin’s Lightning Network to address the issues of speed and scalability and to increase users’ privacy.
Bitcoin’s Lightning Network
The network is Bitcoin Layer 2 Expansion Solution and is developed to boost Bitcoin’s adoption. It can be achieved by opening payment channels on the Bitcoin blockchain where multiple transactions can take place. Once the payment channel is closed, all transactions are updated on the main blockchain to ensure their immutability. This, in turn, multiplies Bitcoin’s transaction speed to an indefinite number of transactions per second.
The Lighting Network aims to solve issues with the Bitcoin and others as well. Owing to its versatility, the Lightning Network is not limited to Bitcoin only. It can be integrated into any other blockchain.
Litecoin, a Bitcoin fork created by Charlie Lee, uses the same blockchain. Of late, the Litecoin (LTC) blockchain has evolved as the most convenient means to access Bitcoin’s Lightning Network because of its 4x block speed over Bitcoin and perpetually reduced transaction costs.
Another noteworthy innovation on these lines is the Atomic Swaps. It is based on a smart contract technology known as hash-time locked contract (HTLC). It is essentially a chain or off-line exchange, essentially transferring value over two block strings. Like, users can now transfer their assets from the Litecoin blockchain to the Lightning Network. Thus, making it extremely suitable for smaller payments.
This kind of contract ensures the safe exchange of currencies by enforcing pre-set parameters. The trade must be completed within a given time limit, and the transaction must be completed from both sides before any funds are released.
Highlighting the technical similarities of BTC and LTC, Charlie Lee, stated:
‘‘Litecoin will also be the easiest on the Lightning network. BTC takes too much time and costs are high? No problem. Quickly open an LTC payment channel on the channel, then swap atomically for BTC if / when you need it. This can be done in one step using submarine swaps! This includes solutions such as the Casa node, which is an all-in-one solution for running a node on the Lightning network. This will allow those who use this product to send and receive payments transferred via the network. In addition, Litecoin support for this product is expected soon.’’
The Lightning Network will augment the integration of BTC and LTC block chains by serving as a decentralized exchange, Lee said.
“Lightning Network will be the ultimate decentralized exchange. Users that are running LN on both BTC and LTC can advertise an exchange price and act as a maker earning a spread. Other users can act as a taker and atomically swap LTC/BTC with the maker node via lightning.”