Lightning and Thunder: Mats Jerratsch of Blockchain Gives His Forecast
A common challenge associated with forwarding a few bitcoins from one wallet to another is the often slow pace at which it occurs. At times, upward of 10 to 15 minutes or more might pass before the transaction is fully executed and confirmed on the blockchain.
What’s behind this delay? In short, the blockchains’ server ecosystems share the same transaction records. So whenever a few bitcoins are sent, all of the blockchain nodes jump into action, facilitating the transaction so the debit of bitcoins from the originating wallet now appears in the destination wallet.
The beauty of bitcoin is that it offers the ideal setup for the delivery of secure, trustless payments without the need for an intermediary like a bank. Yet transactionally, it often lumbers along at a slow pace, is hard to scale, and can be costly. For this reason, bitcoin remains in a stage of relative infancy, far from being fully evolved as a true payment network on the level of a Mastercard or Visa.
Bitcoin’s Lightning and Thunder
The Lightning Network, a peer-to-peer network between thousands of nodes that creates payment channels, endeavors to solve this problem. The network allows for bitcoins to be sent in a trustless manner to other parties without engaging with the main blockchain. Each payment, which is transacted via a multi-sig address to another party, is instant and final.
Bitcoin’s scalability and speed issues have been well documented. Joseph Poon and Thaddeus Dryja, the two authors of the Lightning Network Paper, talked about these networks and how they could serve as a viable alternative to the main bitcoin blockchain, registering transactions in mere seconds through the use of smart contracts.
Thunder is the first known iteration of a Lightning-centric network. Bitcoin transaction hub Blockchain.info is currently in an experiential mode with Thunder, allowing other companies to examine the source code, offer Thunder wallets, engage with the network or provide a fork to it. Thunder is also blessed with the capability of working with myriad other cryptocurrencies.
While Thunder is not yet available to Blockchain wallet users, ideas abound about its potential usefulness in accelerating payment transactions on this and other wallet platforms.
BTCMANAGER spoke with Mats Jerratsch, who recently joined Blockchain to (among other things) coordinate the integration between the Lightning and Thunder Networks. His initial interest in bitcoin began during a perilous time for the global cryptocurrency community.
“I started with trading algorithms when MtGox had to suspend trading. I then got really into smart contracts after watching the Lightning Network presentation video, released in 2015.”
Jerratsch first offers a stripped-down definition of what the Lightning Network is: “The Lightning Network is a payment network, where payments get handed across multiple nodes without custodial risks before being settled to the Bitcoin blockchain. One is not limited in the number of transactions before settling back. This allows for very fast and very cheap payments.”
And how exactly does it work? “Each party in the payment route hands a promise for a payment to the next hop,” Jerratsch explaines. “A smart contract assures that the promise only fulfills if the final receiver accepts the payment. All nodes then redeem the payment one by one. Thunder integrates all of these mechanisms and builds on top of it by adding functionality for pathfinding and peer seeding.”
Ensuing from Lightnings’ advancements, Jerratsch through his engagement with Blockchain, has been working on the Thunder network, best described as an alternative set of nodes which allows for off-chain transactions to occur in a matter of seconds and record back to the blockchain intermittently.
Transactions via Thunder resemble a high-speed bullet train for bitcoin, spewing out 100,000 transactions per second. By means of comparison, the Visa network has the capacity to process 56,000 transactions per second, a number which significantly trumps bitcoin’s current estimated transaction rate of seven per second due to the restrictive block sizes and cumbersome nature of the current bitcoin protocol.
It is also important to note that through the use of Thunder, transactions on a whole become less expensive. When Thunder transactions are recorded intermittently on the bitcoin blockchain, fees still do apply. But through the use of Thunder, a steady stream of transactions with fewer nodes can occur before being recorded on the blockchain. Simply dividing the fees by the number of Thunder transactions yields a scenario where bitcoin payments become much cheaper.
Through the elimination of many barriers inherent in the prevailing bitcoin protocol, Thunder becomes an attractive alternative to legacy payment processing tools like Visa.
Jerratsch says that there are still many barriers and challenges that slow Thunder’s development trajectory: “Financial software is hard. Financial permissionless networks are even harder, as any bug can be exploited by an unknown to drain money out of the system. This software must generally be of very high quality while staying modular for all possible use cases. For adoption, we need to rewrite all software to accept this new kind of payment. This is, all wallets need to support it, all payment providers need to accept it, we need a lot of infrastructure. Also, hiding all this complexity from the user will be a big task.”
Despite all of the inherent difficulties in weathering the storm, Jerratsch remains optimistic about the future of Lightning and Thunder in making bitcoin payment protocols more attractive.
“I may be overly optimistic but I think the world is ready to transact in a more modern, efficient and secure way. So the key factor is making the technology accessible to a broad audience that extends beyond those of us with technical expertise in this space It will be interesting to see how fast other service providers in the industry adapt to this technology as well.”