Bitcoin has been plagued by numerous technical obstacles, which have become more apparent in conjunction with its surge in value.<\/p>\n
A crucial problem for any blockchain-based cryptocurrency is how to scale it while maintaining a decentralised network.<\/p>\n
This has been an issue within the Bitcoin community, culminating in a “civil war” between Bitcoin Cash and the original Bitcoin.<\/p>\n
Bitcoin transactions are currently expensive and can take hours to be verified on the blockchain, making it difficult to use for quick payments.<\/p>\n
Once a scaling solution has been implemented on the blockchain, however, Bitcoin will become easier and cheaper to use – functioning as “digital cash”.<\/p>\n
Bitcoin Cash was born out of the idea of increasing blockchain block size to process more transactions.<\/p>\n
By increasing the block size, the number of transactions processed per block increases and more transactions can be included in the same amount of time.<\/p>\n
There are several drawbacks to this scaling method, though, which is why the Bitcoin Core community opted to pursue other scaling solutions.<\/p>\n
SegWit (Segregated Witness) has now been implemented on the main Bitcoin blockchain, and aims to effectively increase block sizes to 1.8MB while removing the malleability of transaction IDs.<\/p>\n
This upgrade is backwards-compatible with previous transactions on the Bitcoin blockchain and paves the way for the implementation of the Lightning Network – a scaling solution which requires un-modifiable transaction IDs to retain security.<\/p>\n
SegWit is currently being implemented by Bitcoin nodes around the world, but will not be able to solve the scaling problem singlehandedly.<\/p>\n
For that, many Bitcoin advocates have placed their faith in the Lightning Network.<\/p>\n
The Lightning Network plans to solve the blockchain scalability problem by implementing an off-chain solution which uses the security of the blockchain to periodically verify payments.<\/p>\n
Off-chain scaling solutions have great potential for improving the transaction capacity of blockchains, as they only periodically settle their transaction record on the chain while computing transactions on a separate, linked network.<\/p>\n
The Lightning Network works by creating payment channels between users and using its second-layer network to process transactions between users with open payment channels.<\/p>\n
Payment channels exist as smart contracts on the Bitcoin blockchain, and can be used by Lightning Network users to settle their transactions on the actual blockchain.<\/p>\n
Participants with open payment channels form a decentralised second-layer network which offers instant transactions with extremely low fees, making it preferable for Bitcoin users to open Lightning Network channels and send money over the second-layer network.<\/p>\n
The successful implementation of the Lightning Network on the Bitcoin blockchain will open the cryptocurrency to a new world of applications and make it as spendable as fiat currency.<\/p>\n
The Lightning Network is expected to be implemented on the Bitcoin blockchain this year, with developers testing payment channels and finalising the network’s architecture.<\/p>\n
Once a scaling solution has been implemented, Bitcoin could become a true “digital cash”.<\/p>\n","protected":false},"author":341028,"featured_media":149097,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[44696],"tags":[187,35,48253,48255,48257],"class_list":["post-244737","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency","tag-bitcoin","tag-headline","tag-lightning-network","tag-scaling-solutions","tag-segwit"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/244737"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/341028"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=244737"}],"version-history":[{"count":1,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/244737\/revisions"}],"predecessor-version":[{"id":244969,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/244737\/revisions\/244969"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/149097"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=244737"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=244737"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=244737"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}