Can Lightning Enable Micropayments in Other Cryptocurrencies?
The Lightning Network, better known as Lightning, is a unique scalability solution eagerly anticipated by the Bitcoin community and industry. Toward the end of 2016, experts including Andreas Antonopoulos and Litecoin creator Charlie Lee introduced the concept of implementing Lightning in other cryptocurrencies apart from bitcoin.
Lightning is essentially a smart contract project that was first submitted by Joseph Poon and Thaddeus Dryja in early 2015. Poon and Dryja presented Lightning at a San Francisco bitcoin seminar with the intent of developing a technology that could allow the Bitcoin network to settle billions of transactions on a daily basis.
By implementing a technology called Hashed Timelock Contracts (HTLCs), Lightning demonstrated a new method of transaction settlement. Instead of processing bitcoin transactions in a single channel, it proposed the addition of multiple peer-to-peer (P2P) payment channels to secure transactions without third-party trust.
As a result, Lightning presented a protocol wherein users can settle massive volumes of transactions without dealing with confirmation times for each small transaction.
For instance, if Alice was streaming a video on a paid platform that requires users to send a bitcoin transaction of $0.10 for each minute, within a Lightning-enabled network, Alice will be able to send multiple transactions and only settle the very last one that was sent to the platform. Therefore, if Alice watched 10 minutes of the video, she would not be sending ten transactions of $0.10 but one transaction of $1, which accumulates or merges all of her transactions into one single payment.
In the end, the paid video platform will only have to wait for the confirmation period of one transaction instead of 10 separate payments. More importantly, this method of transaction settlement allows users to send thousands or even millions of transactions and pay the fee for a single transaction.
At the beginning of 2016, when Poon and Dryja submitted a whitepaper entitled “The Bitcoin Lightning Network: Scalable Off-Chain Instant Payments,” startups and entrepreneurs realized the full range of applications Lightning provides. It allows the development of micropayment-based platforms like paid-for content sharing networks in which users would tip content providers to access their work.
At the end of 2016, there were already talks in regards to the implementation of Lightning in other cryptocurrencies. Charlie Lee, the creator of Litecoin, specifically proposed his idea of introducing Lightning by activating Segregated Witness (SegWit).
“Litecoin does not have a block size problem. That’s right, and SegWit is not just a block scaling solution. I would even say block scaling is just a side benefit of SegWit. The main fix is transaction malleability, which would allow Lightning Networks (LN) to be built on top of Litecoin.”
The surprising statement of Lee and his blog post entitled “My Vision For SegWit And Lightning Networks On Litecoin And Bitcoin” intrigued many users of both Litecoin and Bitcoin, who began to ponder the possibility of actually activating SegWit and introducing Lightning to Litecoin ahead of Bitcoin.
In response to these inquiries, Bitcoin and security expert Andreas Antonopoulos explained that it is in fact entirely possible to implement Lightning if a cryptocurrency network has three main components necessary for Lightning to operate properly.
“If they introduce SegWit and they have already introduced checklocktimeverify, then you can run Lightning on Bitcoin Unlimited. You could run Lightning Network on top of Ethereum or any cryptocurrency that enables the three basic primitives of checking hashes, multi-signature contracts, and locktime,” explained Antonopoulos.
On January 28, Litecoin is anticipated to introduce voting on SegWit. Once approved, this will pave the way for Lightning. On top of implementing Lightning on Litecoin, Lee also proposed the development of a connection between Bitcoin and Litecoin that would essentially allow users to send a transaction from one cryptocurrency to another without any boundaries.
Both Lee and Antonopoulos beliefs are becoming closer to reality, where Lightning can exist in other cryptocurrencies; unleashing the potential of Lightning will lead to the emergence of applications that have not been possible before.