Development of Bitcoin‘s core protocol could alleviate many scalability issues facing Bitcoin. Advancements on the new Lightning Network could allow for fast, inexpensive, and convenient retail transactions.
History of the Lightning Network
The Lightning Network is a layer on top of the blockchain that utilizes smart-contracts to execute transactions. Such a system enables payments without any on-chain transactions, eliminating high-fees and long transaction times.
Under development since 2016, the Lightning Network wallet went live on March 28th, 2018, followed by an Android app the following week.
Using the Lightning Network transactions can resolve in milliseconds at the cost of less than a tenth of a cent.
Theoretically, the Lightning Network is capable of executing billions of transactions per second across the network.
Although Bitcoin is not known for its smart contracts, improvements upon native Bitcoin Script language in the 2015 Bitcoin Improvement Proposal (BIP) 66 made the Lightning Network possible. The BIP added new operations to Bitcoin’s limited Script language allowing for the Lightning Network as it is seen today.
New Technology Leverages the Lightning Network
Another development could radically alter how users transact with Bitcoin – near-field communication, or NFC, could allow for Bitcoin transactions to happen at the tap of a phone.
Services like Apple Pay, Android Pay, and Samsung Pay already support NFC functionality with NFC readers that cost as little as $49.
The open-source Lightning Network project is already making progress on integrating such a system.
One developer working on NFC payments envisions a system where customers could make instantaneous payments with or without mobile service.
Impact on Bitcoin
Bitcoin’s use as a method of payment has dropped precipitously. Notable names such as Microsoft, Reddit, Stripe, and Steam abandoned the payment method due to high fees and long transaction times.
However, widespread adoption of NFC alongside Lightning Network could move Bitcoin from a store of value to a medium of exchange. Such a development could also mend schisms between the Bitcoin Core and Bitcoin Cash communities.
