Original author: Twitter@EvieEvieXia
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Research Guide:
When Satoshi Nakamoto created Bitcoin in 2009, he had the idea of payment channels, and included a draft code for payment channels in Bitcoin 1.0. In the next few years, the realization of the payment channel and Lightning Network has been pushed forward by the geeks in the Bitcoin community. Difficult and long road.
Twitter founder Jack said that it is only a matter of time before the Lightning Network is integrated into Twitter or BlueSky, and announced in 2021 that Twitter can support third-party Lightning Network tipping services. Recently, the popular decentralized social application Damus has a built-in Bitcoin Lightning Network payment function, which has once again attracted everyone's attention to the Lightning Network.
The lightning network puts the transaction link off-chain, and only the final transaction result is confirmed on the chain, thereby improving the transaction efficiency of the Bitcoin network and allowing users to complete payments at a lower cost and faster.
The use cases of Lightning Network include reward payment on social platforms, cross-border remittance, merchant payment, transfer transactions, etc., which can meet the needs of diverse payment scenarios.
After El Salvador legalizes Bitcoin in 2021, the number and amount of payments on the Lightning Network will rise rapidly. As of February 8, 2023, the Lightning Network has a total of 16,000 nodes, nearly 77,000 payment channels, and channel funds of about 5,356 bitcoins (about 124 million US dollars).
In 2022, there will also be a number of large-scale financing in the lightning network field, and top institutions including a16z and Paradigm will also participate in the investment of related projects.
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1. What is Lightning Network
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1. Development history
The earliest concept of Lightning Network is called "payment channel". Its design idea is to use transaction replacement to update the status of unconfirmed transactions until it is broadcast to the Bitcoin network. When Satoshi Nakamoto created Bitcoin in 2009, he had the idea of payment channels, and included a draft code for payment channels in Bitcoin 1.0, which allows users to update transactions before they are confirmed by the network. In 2013, Mike Hearn further elaborated on Satoshi Nakamoto's ideas for payment channels on the Bitcoin-dev mailing list.
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Payment Channel Mesh Routing for the Lightning Network
In December 2015, Gregory Maxwell proposed a scaling roadmap in a Bitcoin developer email, which prominently included the Lightning Network. This roadmap has the support of a large portion of the Bitcoin technical community and is implemented in the Bitcoin Core project. This has inspired everyone's expectations for the Lightning Network. Subsequently, enthusiastic developers built the protocol stack of Lightning Network - BOLT. Based on this standard, Lightning Network can be compatible with Bitcoin, Litecoin (or other Bitcoin-like Tokens).
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2. Implementation method
The core idea of the Lightning Network is not complicated, that is, the transaction link is placed off-chain, and only the final transaction result is confirmed on the chain, so as to improve the transaction efficiency of the existing Bitcoin network. Its operation method is as follows:
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The operating logic of Lightning Network, source: https://www.youtube.com/watch?v=FOT6NqaEtfc
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The operating logic of Lightning Network, source: https://www.youtube.com/watch?v=FOT6NqaEtfc
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1. Improve transaction speed
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2. Lower the transaction threshold
The smallest unit that can be divided by a single Bitcoin in the Lightning Network"Satoshi"secondary title
3. Lower transaction fees
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1. Data performance
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Number of BTCs in the Lightning Network, data source: https://river.com/learn/files/river-lightning-report.pdf
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Global nodes and channels of Lightning Network, image source; https://explorer.acinq.co/2. Usage scenarios
Based on the gradual maturity of technology, payment and social giants are promoting the popularization of Lightning Network. Current usage scenarios of the Lightning Network include:
Social platform payment and tipping: Damus, which has become popular recently, supports lightning network payment and tipping functions, and users can choose to use dozens of wallets such as Strike, Cash App, and Blue Wallet.
Cross-border remittances: Digital payments platform Strike announced in January 2023 a partnership with Send Globally to enable fast, secure, and low-cost remittances between users in the U.S. and the Philippines via the Lightning Network. With Send Globally, U.S. dollars can be converted into bitcoins, sent via the Lightning Network to a third-party partner in the recipient’s country, converted into local currency, and sent directly to the recipient’s account.
Merchant Payments: Strike has partnered with Shopify, Blackhawk Network, and NCR to build a bitcoin payments system that allows merchants to quickly receive dollars in U.S. dollars after customers pay in cryptocurrencies. Merchants currently supporting the payment system include McDonald's, CVS, Walgreens, Whole Foods, and Walmart.
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3. Ease of use
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4. Investment and financing
In 2022, there will also be a number of large-scale financing in the lightning network field, and top institutions including a16z and Paradigm will also participate in the investment of related projects:
In April 2022, Lightning Labs, a Bitcoin-focused company, completed a $70 million Series B round led by Valor Equity Partners.
In May 2022, Lightspark, the Bitcoin lightning network company founded by Meta cryptocurrency director David Marcus, completed a round of financing led by a16z and Paradigm.
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4. Problems in the development of Lightning Network
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5. How will Lightning Network develop?
Overall, the Lightning Network has opened up a new path for Bitcoin to be used for daily payments, and is also working hard for Bitcoin to realize the original intention of "peer-to-peer electronic cash system". From the idea of the Lightning Network to its official landing in 2018, it has been moving forward with difficulty, and it is still in its early stages. But what is more optimistic is that the Lightning Network will develop rapidly from 2021, gradually forming a consensus among user groups, and expanding real and effective use cases.
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References:
The State of Lightning
file:///Users/xiayiwei/Downloads/the-state-of-lightning-volume-2% 20( 1).pdf
Insights From the 4 th Largest Lightning Network Node
https://river.com/learn/files/river-lightning-report.pdf
What is the Bitcoin Lightning Network tip supported by Nostr, and how to use it for micropayments?
https://www.theblockbeats.info/news/34244
Lightning Network - History and Reality
https://mirror.xyz/bitcrab.eth/T 3 gIfKepjfs 3 YUiRWTgCTqS 6 gc 8 LaC 5 z 7 lYKQY-HLEE
History of the Lightning Network: From Brainstorming to Beta
https://www.btcstudy.org/2020/09/03/history-lightning-brainstorm-beta/#%E 9% 97% AA%E 7% 94% B 5% E 7% BD% 91% E 7% BB% 9 C
Locked Bitcoin Breaks 5,000 Milestones, Lightning Network May Be Seriously Underestimated
https://news.marsbit.co/20221014134404738571.html
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