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Lightning: The Bitcoin Scaling Tech You Really Should Know

Lightning: The Bitcoin Scaling Tech You Really Should Know

Lightning: The Bitcoin Scaling Tech You Really Should Know

One of the most talked about technologies in development for bitcoin is the Lightning Network. But what does it do, and when might it be ready?

One of the most talked about technologies in development for bitcoin is the Lightning Network. But what does it do, and when might it be ready?

One of the most talked about technologies in development for bitcoin is the Lightning Network. But what does it do, and when might it be ready?

AccessTimeIconDec 9, 2017, 10:45 AM
Updated Aug 18, 2021, 7:39 PM

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"What is bitcoin? Can I buy, like, pizza with it?"

Asked by sports blogger Dave Portnoy in his inaugural video as a bitcoin investor, the comment cuts to the core of a truism about the network: while it's been billed as a "digital currency," it's actually not all that useful for payments today. In short, you're very unlikely to stumble on a bodega that accepts it (should you even want to spend it).

But that's not to say that engineers aren't working on addressing the issue.

That's why one of the most talked about technologies currently in development for bitcoin is the Lightning Network.

Rather than updating bitcoin's underlying software (which has proven to be a messy process), Lightning essentially adds an extra layer to the tech, one where transactions can be made more cheaply and quickly, but with, hypothetically, the same security backing of the blockchain.

Proposed as far back as 2015, Lightning has progressed gradually over the years, migrating from white paper, to prototype, to more advanced prototype.

It's the most recent test, however, that has some looking forward to a not-so-distant future when users can at last transact via Lightning, putting to the test long-held assumptions and criticisms.

As Jack Mallers, developer of Lightning desktop app Zapp, put it:

"It's fairly close to working to the point where the public can test with real money, but not necessarily at the point where people can operate a business on it quite yet."

Step one, the technology

What steps are left before Lightning is usable? Lightning engineers have some ideas.

Though Lightning took a big step early this week, the engineers still need to release software with which real users can make real Lightning transactions. So, the first and most obvious step is to let Lightning out of the cage and to watch and see if users have any issues during this initial stage.

"In the near future most problems will be about getting Lightning to work in practice," Swiss university ETH Zürich researcher Conrad Burchert told CoinDesk.

And, once Lightning's up and running, engineers foresee other subtle technical challenges, such as getting the "network structure" right, Burchert said. Bad actors might be able to halt transactions, for example, or users might want more control over where their transactions are going.

"Whenever you're building a new financial protocol, you want to ensure it's secure as possible, so we're working on various security-related efforts," said Elizabeth Stark, co-founder and CEO of Lightning Labs, one of a handful of startups dedicated solely to the technology.

Mallers agreed that these technical hurdles need to be solved before Lightning can reach the mainstream.

"All of that will need to get ironed out before I would advise a company to start to rely on the Lightning Network for business or money that they can't afford to lose," Mallers said, adding:

"The only thing that could speed it up is more engineers."

Stark concurred, adding that despite the promise of the technology, there are astoundingly few developers working on it right now.

"We need more hours in the day. ... There are 10 or fewer full-time developers working across all implementations of Lightning. Getting more contributors and people building out the protocol would certainly help move things along," she told CoinDesk.

Hiding the wires

Another piece of the puzzle is making the Lightning apps easy to use.

It's promising that apps supporting Lightning as a payment method are already cropping up, but so far they're pretty confusing to use. A lot of the wires are still popping out into view.

Zap, a Lightning desktop app, requires users to configure their node and plug in its IP address, for example, a far cry from today's money apps that hide these technical details from users.

"That stuff will definitely be hidden one day," said Mallers, envisioning that Zap will one day look closer to Venmo, an app for sending small amounts of money to friends. "Eventually peers on the network will just look like contacts on your phone."

Maller argues this is happening already.

LND, the Lightning implementation most popular among app developers, for example, recently added a feature that automates creating a channel between the sender and receiver when users deposit money, "so that users don't have to understand what all that means," he said.

That's not to say he thinks it will happen right away, though.

"Baby steps," he continued. "Right now the Lightning Network still probably favors technical users. Slowly but surely we'll abstract a lot of this stuff away, so it's just about paying and receiving money."

"As far as Lightning Network changing the world – where I can wave my phone and pay for things and stuff will show up – I'd say it'll take a year or two," Mallers said.

Chicken-and-egg issue

Then there's the question: Will users actually want to use bitcoin? Even with faster, cheaper Lightning-like transactions in place?

Bitcoin developer Alphonse Pace believes it could be a challenge for Lightning to achieve a "network effect," where users have an incentive to use the technology because other people are using it.

And, who will adopt it first?

"It's a chicken-and-egg problem," said Pace. "Wallets will want people wanting to use it to support it, and people will want wallets to support using it."

Alex Bosworth, developer of Lightning apps HTLC.me and Yalls alluded to a similar problem.

"There is somewhat of a bootstrapping issue. We need to have apps to encourage wallets and wallets to encourage apps," said Bosworth.

And, even if bitcoin transactions become faster and cheaper (because of Lightning) than familiar payment apps, such as Apple Pay, he thinks users will be cautious at first.

"If you ask a normal person what they want to pay with, they would probably go with Apple Pay because that's what they are used to," he said.

In conversation, Lightning developers expect to overcome these hurdles. But, again, they think it will take time.

High expectations

Although it might take time to iron out these issues, developers were mostly optimistic that Lightning would help achieve the dream of making bitcoin a usable payment system. Rome wasn't built in a day, after all. And neither were computers or the internet, which each took decades to reach normal people.

Mallers argued Lightning "will really change the way that we send money to each other on a day to day basis." But he thinks the community might have unreal expectations for how long it will take engineers to achieve that.

"[To these engineers,] I would hope you'd go 'oh take your time, would you like any water?' But the community seems to be like 'Why's it not here tomorrow?' I think users over-estimated Lightning's deadlines," he said.

Bosworth offered a similarly optimistic take: "[The Lightning Network] could be like the WWW was to email. It might take a while to grow, but the more it grows the better it will get."

He added that his dad, Adam Bosworth, led the tech team behind one of the first web browsers in 1995, just as the internet was finally making its way out of research laboratories to normal people.

Bosworth said:

"I remember that time as being pretty exciting because of all of the opportunities that were going to fall out of web browsers. This reminds me a lot of that."

Inert gas image via Shutterstock

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