The blockchain’s increasing size continues to raise concerns about its ability to accommodate transaction growth.
But, could a decentralised system where transactions are sent over a network of off-blockchain micropayment channels solve the ledger’s scalability problems?
Joseph Poon and Thaddeus Dryja, the developers behind the Bitcoin Lightning Network, think so.
Although still in its nascent stage, the Lightning Network – based on a recent white paper – aims to solve the scalability issue by implementing hashed timelock contracts between users.
The Bitcoin Lightning Network came to life in 2013, when Poon, “like many before him”, he says, had the idea for hub and spoke payment channels. Dryja came on board soon after, making scripting and transactions more compact.
Poon told CoinDesk:
“I think that it is important to look at the way financial systems work because bitcoin development is replaying the history of money. The Lightning Network has significant similarities with how existing financial systems solve this problem.”
“We hope to help solve bitcoin scalability and instant transactions, enabling bitcoin to encompass all transactions – even many thousands of micropayments per person,” he concluded.
Initial challenges included the realisation that the solution required the implementation of