Charging up the Lightning Network
Bitcoin's scalability has been a long-standing challenge that has limited its adoption as a form of everyday payment. The Lightning Network, a layer-2 solution built on top of the Bitcoin blockchain, has been heralded as a potential game-changer that could address this issue. With its ability to facilitate fast, low-cost, and secure transactions, the Lightning Network makes Bitcoin more practical for everyday use. However, despite its many advantages, the Lightning Network has yet to achieve mainstream adoption.
In this article, we will delve into some of the factors that must be addressed for the Lightning Network to reach its potential, and how Lightspark is actively working towards overcoming these barriers to adoption.
Lightning Network Complexity
As innovative as the solutions underpinning the Lightning Network are, they are complex and challenging to understand and use. Running a Lightning node is a highly technical process full of potential pitfalls. Lightspark acknowledges these challenges and is committed to simplifying the Lightning Network experience. Key areas of complexity include:
- Maintaining a well-connected node is time-consuming: For a Lightning node to operate efficiently, it must be and must remain well-connected to other Lightning Network nodes. This requires making decisions about which peers to establish channels with, how much balance to maintain in each channel, and when and how to open new channels. This work is difficult and time-consuming; indeed, some companies have full-time teams maintaining their nodes.
- Rebalancing is challenging: To support ongoing payment activities, a node’s channels must be well balanced, meaning they must have bitcoin in the right positions in their channels to send and receive funds as needed. Channels with high transaction volumes can become unbalanced quickly and often. Users often need to continuously monitor their nodes and make frequent decisions about which channels should be rebalanced and by how much.
- Liquidity is key: As with channel rebalancing, a user must ensure that their node has bitcoin liquidity in the correct channels to support payments. Establishing sufficient inbound liquidity to be able to receive payments from the network, in particular, is a confusing and often fraught exercise for participants on the Lightning Network.
- Having BTC divided between layer 1 and layer 2 adds complexity: The separation between layer 1 (Bitcoin) and layer 2 (Lightning) funds adds complexity to payments flows. When bitcoin is held on layer 1, it takes time to move it for use on layer 2. When bitcoin is on layer 2, users may need to close channels to move them to layer 1, to then transfer to other layer 1 addresses. The logistics of moving bitcoin between layers adds time and complexity to payments activity.
- Nodes must be online: Nodes must be online to both send and, more problematically, receive payments. If a laptop running your node goes to sleep, you can’t receive payments. If your machine restarts or if your mobile wallet isn't at the forefront, payments cannot be received.
- The Lightning Network Graph is Opaque: The Lightning network is a graph of payment channels, and channel balances across the network are difficult to track. When routing across the network, nodes typically must guess which routes may be successful and iteratively try those routes - a process that increases payment latency and the chance of failure.
At Lightspark, we recognize that our customers want an enterprise-grade payments experience without having to manage the complexity of the Lightning protocol. Our services seek to address behind the scenes the challenges of node and channel management so that our customers can focus on sending and receiving payments. We create a comprehensive picture of the graph and use smart routing and channel establishment to reduce failures.
Moving value on Lightning should be simple and secure. Customers will not need to know how to set up or rebalance channels to use the network. With Lightspark’s services, a customer’s bitcoin is accessible and available to be used by them on L2 when it's needed. Customers can receive while offline. We put the end-user experience first and strive to enable better and faster payments. All while retaining the security features of Bitcoin.
Expanding Bitcoin To Solve Real-World Problems
For Lightning to experience exponential growth as a payment solution, it must provide both unmistakable benefits over other payment networks and must easily support new use cases. The benefits of Lightning are exciting, but using Lightning has been too complex to fully demonstrate the powers of the network. Being able to move money as simply as moving bits over the internet begins to change the dynamic of what’s possible. At Lightspark, we are working closely with partners to enable developers to easily build on top of the network and expand available use cases. We are committed to collaborating with our partners to exhibit new use cases that traditional fiat rails, for example, don’t support. New possibilities arise when it’s possible to stream money at a low cost, in real-time, globally.
Lightspark’s Commitment to Lightning
At Lightspark, we’re working to advance the Lightning Network and help our partners build their businesses. We see a path towards a world where money moves natively over the internet. It’s a path that needs a more intuitive version of Lightning - one where Lightning isn’t complex but instead makes lives easier for businesses, merchants, and developers. It’s a path that cannot be forged alone but one where we must walk hand-in-hand with our partners, the open-source community, and leaders in the industry. It’s a path worth walking - a path that leads towards the simplest, most efficient, interoperable future of payments.