The days of near-instantaneous payment seem like something of the science fiction genre. Yet, recent undertakings in the bitcoin industry are working on solutions which may allow billions of transactions per second to be made in a model similar to the routing system employed by today’s internet infrastructure. If bitcoin is capable of scaling to billions of transactions per second by using this routing system, network scaling issues would no longer persist and a new velocity of money could empower considerable economic growth.
The Lightning Network
One of the solutions currently in development for scaling the bitcoin network in order to accommodate more transactions is known as the Lighting Network. The Lightning Network proposal holds that millions or even billions of transactions could be made per second by routing payments through the blockchain rather than storing data for each individual change in ownership. With this type of payment infrastructure, parties could send transactions to each other without requiring every movement of money to be recorded in the bitcoin blockchain, potentially reducing the burden of current network payload.
The creators behind the lightning network, Joseph Poon and Tadge Dryja, envision a system where supernodes are charged with verifying large groups of transactions to the main bitcoin blockchain. These supernodes would act as “minimally trusted intermediaries” and be the custodians between the blockchain and lightning payment channels.
Poon and Dryja have mentioned there may be potential for these supernodes to earn revenue from transaction fees, but claim the profit margins are likely to be driven to near zero due to competition.
“Our vision is that the nodes will be very decentralized, it will primarily look “scale-free” in that there may be some nodes which are well-connected (supernodes),” Poon told Diginomics. “It’s entirely possible to conduct transactions without connecting to a supernode at all. It might be more probable if you’re both connected to that entity, but it absolutely isn’t a necessity.”
Although current limitations do exist today in the bitcoin transaction process (such as the limit of 7 transactions per second), adopting a network routing model similar to the world-wide web of today could be key in scaling bitcoin to a point where it is viable for mainstream business.
Software engineers still need to test a prototype to determine real-world viability, but the blueprints for scaling the bitcoin network are beginning to emerge and the Lightning Network may prove to be a viable answer.
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