Lightning – cryptocurrency and the Internet of Things
Bitcoin is an experiment. That’s granted. The fact that it’s trusted and actually useful is nothing short of phenomenal. Last week for example, the trade volume amounted to US$229m. Nevertheless, Bitcoin has some fundamental constraints that keep it from going mainstream: it has a ballpark limit of 7 transactions per second, and having confidence that a transaction has ‘gone through’ – non-recourse transactions – takes roughly 20 to 60 minutes depending on the level of confidence you’re looking for. (The user experience sucks too, but that’s not for this post.) While 229 million dollars is no small chunk of change, Visa processes many thousands of transactions per second, peaking at tens of thousands, and will have processed around US$130 billion last week. State channel – more exciting than it sounds The crypto awesome sauce underpinning Bitcoin is known as the blockchain, perhaps the No.1 tech buzzword of recent times. It’s at the heart of the currency’s success – preventing users spending the same money twice – but is also the nub of its relatively slothful nature. It’s with a fair degree of excitement then that I’ve been tracking the progress of Lightning, a protocol first mooted to my knowledge in 2013. The jargon here is state channel – blockchain interactions that could occur on the blockchain but get conducted off-chain without impairing the trust parties have in the interaction. Lightning facilitates state channel to speed things up and attenuate the costs needed to prove transactions (and offers a little more spark in terms of brand appeal!) ...