On March 19, the Stellar team released technical specifications and guidelines for the implementation of the Lightning Network, the Bitcoin scalability solution enabled by SegWit. The move follows the introduction of Lightning to the mainnet of both Bitcoin and Litecoin as BTCManager reported on March 16.
When Bitcoin became popular in 2009, it was strongly viewed as an alternative means of payment. However, as more people started using Bitcoin, the system became slower and more costly.
Over the past recent years, the development community has pondered ways to make Bitcoin transactions faster and less costly. One of them being the Lightning Network.
Stellar Lumen, a lesser known cryptocurrency and one of the most deployment-ready of the major platforms, are taking advantage of this technology in its quest to become the world’s digital payment rail.
How Does Lightning Work?
Lightning is the scalability solution for distributed payment networks, initially proposed for the Bitcoin blockchain. Lightning is constructed from building blocks referred to as payment channels. They enable clients to open a channel off-chain and transact there rather than on the public ledger.
Since they’re off-chain, transactions in the channel can be sent without the typical delay times, because the transactions are not committed to the Bitcoin blockchain.
Similar to the on-chain transactions, there’s no counterparty risk. Instead, the Lightning Network keeps a record of transactions without finalizing them, later sending a message describing only the final balances of the channel to the Bitcoin network as a regular transaction. Subsequently, closing the channel and securing the balance on the blockchain.
Lightning likewise has the capability to bolster cross-protocol payments. For example, a payment where the sender sends bitcoin on the Bitcoin network and the beneficiary gets lumens on the Stellar network, without the need for a third party in the process.
Stellar’s Own Modification
Overall, the specification depicts how Stellar wants to adopt this innovation. Stella’s creator, Jed McCaleb, first explored the Lightning technology back in 2015.
Although, the Bitcoin-based Lightning Network source code can’t just be modified for the Stellar network. Its engineers must instead create their own version of the software.
Jed McCaleb has since made improvements to the original plan with the support of reputable engineer Jeremy Rubin who has actively contributed to Bitcoin’s core software node throughout the years. According to Jeremy Rubin:
“Stellar’s state channel implementation relies on the fact that every Stellar transaction specifies a source account and a sequence number. We’ve figured out how to use those sequence numbers as a natural versioning mechanism for off-chain payments; it’s similar to how your bank gets alerted for out-of-order cheques.”
Stellar’s engineers assert that its Lightning Network implementation could end up being much more robust than those made for bitcoin and other comparative coins, enabling clients to complete any operation that can be executed on the Stellar network. Also, it also enables creating, deleting, or changing permissions on accounts within a payment channel.
Stellar aims to launch the first part of the technology on a beta test network by April 1, with ambitious plans to provide a realistic usage for payments by Autumn 2018. With the the near simultaneous adoption of the Lightning Network technology by various cryptocurrencies, McCaleb hopes that Stellar would grow at a faster pace.