“There are a lot of people working on layer 2 solutions that are waiting for Segwit,” says Bitfinex Chief Security Officer Phil Potter in a discussion between core developers, bitcoin ecosystem participants and Bitcoin enthusiast Roger Ver. “If Segwit doesn’t happen, think of the downstream projects. There are eight or nine different Lightning projects being sponsored out there, which will be completely hamstrung without this — sure, we have some ways to do payment channels without Segwit, but we don’t have a trustless Lightning Network and the malleability fix is really helpful for that. Fixing malleability has been a holy grail for a long time.”
Mr. Potter, whose Bitcoin exchange Bitfinex suffered a $71 million hack in 2016, adds: “The fact that we can do it through a soft-fork, we should be activating Segwit just for that alone.”
Lightning Network is a protocol designed to speed up the Bitcoin blockchain, and potentially other blockchains, as well. In light of Bitcoin’s block size limitation, Lightning Network sought to create a system for payment channel-creation for blockchains, which represent multi-signature transactions on a blockchain through two-way channels to abet instantaneous transactions.
“I was pretty skeptical about the different solutions similar to lightning, and I dislike how they were trying to implement zero-confirmation payment channels,” says Alex Petrov of Bitcoin security and infrastructure provider Bitfury. “Zero-confirmation is the grounds for double spending and it’s ruining the basic idea of a bitcoin that bitcoin is solving, the double spending problem. Lightning is a brilliant idea and I like it, because it provides instant payment using the same bitcoin in a very safe manner. If you get deeper into the technical solution, you will realize it’s opening a new world for micropayments. It’s providing the instant payment, that you can send the money in just milliseconds in huge volumes using different channels.”
Further, core developers highlight the stalwart security in the Lightning System.
“There’s almost no way how you can manipulate or steal money or lose money and you’re sending transaction, you’re locking it for just a second, and if it doesn’t release the transaction you will just get the money back,” Mr. Petrov adds. “The solution which is working on top of the blockchain, and you still need the blockchain to provide the temporal fixes of all the balances, but it’s exchanging the money, absolutely the same idea as bitcoin working here, just exchanging the balances of different people. You will be just pushed out from market and you won’t be able to provide any services.”
Bitcoin core developers posit Lightning as a way to solve many problems now facing the Bitcoin network.
“Lightning is a separate use case, it solves a lot of problems that I think Roger wants solved,” says Bitcoin core developer and Ciphrex founder Eric Lombrozo. “It solves zero-confirmation problem– you can send transactions securely very quickly for low fees. I don’t see how anyone would say they don’t want that use case to be solved. Right now, you can’t send tiny amounts and be economically viable. This is useful for content distribution and service applications. It would be great to have these other use cases that don’t compete for on-chain capacity. We could get all developers behind segwit, and a huge chunk of the industry behind this, including some of the companies that Roger mentions. If you go to the bitcoincore.org site, you can see the segwit support, and a huge chunk of the industry is behind this and wants to see it activate. After a lot of work and issues, this is the best we could do — it doubles capacity, it allows for additional use cases that we couldn’t do before.” Mr. Petrov believes laying the groundwork now so future such extensions can work is important.
“I think providing a solid base for future extensions like lightning and MAST and providing additional flexibility how you can scale bitcoin and use it for multiple purposes, hugely increasing and exponentially increasing for the future,” he says. “Lightning-like solution can provide a huge amount of transactions and easily competing with Visa and Mastercard and Paypal. And it’s very fast transactions, you could use it to pay for coffee. It’s very optimal.”
Image from Shutterstock.Follow us on Telegram.
• Join CCN's crypto community for $9.99 per month, click here.
• Want exclusive analysis and crypto insights from Hacked.com? Click here.
• Open Positions at CCN: Full Time and Part Time Journalists Wanted.