The Lightning Network, viewed by many Bitcoin Core developers as the primary solution for transaction scaling, could reach a usable state this summer. Built as a layer on top of the blockchain itself,
The Lightning Network, viewed by many Bitcoin Core developers as the primary solution for transaction scaling, could reach a usable state this summer. Built as a layer on top of the blockchain itself, the protocol routes payments through channels, allowing near-instantaneous transfers with minimal fees. Segregated Witness, which fixes transaction malleability, has removed design obstacles that previously hampered development.
Joseph Poon, who co-created the Lightning Network with Tadge Dryja, told MiningPool the technology would reach functional form in coming months. Development happens on SegNet, a test environment purpose-built for Segregated Witness. "We are currently testing Lightning against SegNet," Poon explained. "Tadge Dryja and Olaoluwa Osuntokun have been integrating Segregated Witness in our software. In fact, I believe Tadge was the first person to make a witness block larger than 1MB on SegNet 3 when testing the mempool." Osuntokun has been adding privacy features for small transactions. Code is on GitHub, and Poon said the implementation should reach testable form on SegNet 4 very soon.
Poon expects a basic version of Lightning to launch once Segregated Witness activates on the main Bitcoin network, provided the soft-fork receives approval and goes live by summer. "A basic, functional version of Lightning Network should be ready when the Segregated Witness soft-fork goes live on Bitcoin, presuming it gets merged and activated this Summer," Poon said. "Hopefully it gets in this Summer, as this will enable entirely new decentralized use cases for Bitcoin which were not possible before on any financial system due to custodial risk underwriting."
At the 2016 MIT Bitcoin Expo, Poon presented a reframed view of Bitcoin. Instead of thinking of it primarily as a payment system, he suggested viewing it as a court mechanism for smart contracts. Eric Lombrozo, a Bitcoin Core contributor and CEO of Ciphrex, said a feature-complete pull request for Segregated Witness should arrive in April 2016. Community review and testing will likely add time to that schedule. SegNet 4, released recently, serves as the final test environment for Segregated Witness.
The Bitcoin network currently processes fewer than ten transactions per second. Poon sees Lightning handling far more volume. "A single node on a reasonably fast internet connection will be able to process thousands of transactions per second. In aggregate across the entire network, the total capacity will be in the millions per second, even early on," he told MiningPool. Future soft-fork improvements might help optimization, but transaction malleability proved to be the main technical hurdle blocking development, and Segregated Witness solves that obstacle.
Blockstream engineer Rusty Russell is building a separate Lightning Network implementation, also adapted for SegNet 4. Russell told MiningPool he doesn't expect his version to launch when Segregated Witness and the other protocol upgrades in SegNet 4 roll out to Bitcoin's main network. Russell noted that SegNet 4 represents "the last bitcoin protocol change required to make lightning a reality."
