Bitcoin’s Lightning Network Could Soon Receive Major Update

Reading Time: 2 minutes

The Lightning Network is perhaps one of the biggest advancements in the Bitcoin ecosystem. As we have witnessed over the past few months, the network has facilitated thousands of new payment channels which points to the fact that it is indeed a significant step forward towards the mass adoption and mainstream use of cryptocurrencies.

A couple of months ago, the Lightning Network did not seem to be as promising as it is now – only 89 channels existed as of January 19th. This, to some people, was an indication of the unfeasibility if the scaling solution while a few others considered it be the lack of adoption due to the unfinished state of the technology at the time. However, as of May 24, the number of channels in the Lightning Network had grown to over 6,600 direct connections. Though in comparison to the mainstream financial sector this is rather small, it certainly proves that there is genuine interest in the initiative.

Even though the lightning network is just beginning to make waves in the bitcoin ecosystem, its developers are already planning to re-architect the technology. But why? Well, while the network has been touted as a significant boost to bitcoin’s capacity, it requires its users to store a significant amount of data that makes it rather difficult to download and run. To solve this problem, the lightning developers, including ‘Lightning Labs co-founder ‘Laolu’ Osuntokun and Blockstream’s Christian Decker and Rusty Russell, have recently published a new proposal which imagines a simplified alternative way of making off-chain transactions – this will be known as eltoo.

The new proposal is also intended not only to condense the amount of data that the network’s users are required to store but to also keep the users’ digital currencies safe – all the data that is currently stored poses a series problem, in that, in case a user accidentally broadcasts older data, they might end up losing money.

Eltoo, the proposed upgrade, on the other hand, only stores the most recent off-chain transaction data. This solves the well-known “information asymmetry” problem. Decker has been very keen on pursuing the project since he has been affected by the problem himself.

“This actually happened to me,” he said. “I had an old lightning node on my laptop. I restored it. I didn’t know I didn’t have the newest state. The guy closed the connection because they knew it was an old state! Because he could steal it. Which he did, by the way.”

“With eltoo, we reduce the risk of funds being swept away. We remove this toxic information,” he added.

He also pointed out that the proposal’s name is a joke of sorts – ‘eltoo’ is the phonetic spelling of “L2” that stands for “layer-two”, which is what people call technologies like the Lighting Network which take transactions off-chain.

Josh Andrews

Author: Josh Andrews

As an avid follower of the crypto world from the beginning since early 2010, Josh has experienced and covered every drop, turn and rise of Bitcoin from the first halving to the countless attempts of regulation. Over the years Josh has developed a keen interest in the different applications and uses of Bitcoin and its current movement within the gambling industry. It's safe to say very few can match Josh's passion for the growth and development of Bitcoin.

Leave a Reply

Your email address will not be published. Required fields are marked *