We’ve all read or heard it at least once: bitcoin won’t go to far but technology behind it, blockchain is good and we like that. Of course, we are talking about the narrative from financial institutions and large banks who tried discrediting bitcoin by pushing such agenda.
For Lightning Labs CEO Elizabeth Stark and others working on bitcoin software, that narrative was never accurate.
Stark told Yahoo Finance a story, first time she told it publicly (see the above video), that illustrates how overpowering the ‘blockchain, not bitcoin’ narrative became for a while.
When we first pitched my company Lightning Labs, we actually took the word ‘bitcoin’ out of our deck and our marketing material because it was so much about blockchain,” she says. “Now, I feel like we’ve entered into a ‘bitcoin, not blockchain’ world, where people understand the value of cryptocurrency technology and what these can bring. You also have proof of work in bitcoin, you have the public/private key cryptography. There are other things that make bitcoin special. Somehow, the blockchain part got separated and became a thing.
Hailed as one of the most potent solutions to cryptocurrency scaling currently under development, the lightning network effectively creates a layer on top of bitcoin, enabling fast and cheap transactions which can net settle to the bitcoin blockchain.
Proposed by Thaddeus Dryja and Joseph Poon in a 2015 white paper, the idea is based on a network that sits on top of the bitcoin blockchain, and eventually settles on it. The network is comprised of user-generated channels that send payments back and forth in a secure and trust-less fashion (trust-less means that you don’t need to trust or even know your counterparty).
Say, for instance, that I wanted to pay you for each minute of video that I watched. We would open up a lightning channel, and as the minutes rolled by, periodic payments would be made from my wallet to yours. When I’m done watching, we would close the channel to settle the net amount on the bitcoin blockchain.
Because the transactions are just between me and you and don’t need to be broadcast to the whole network, they are almost instantaneous. And because there are no miners that need incentivizing, transaction fees are low or even non-existent.
Now Lightning Labs, helmed by Stark, has launched the beta of its Lightning software, LND. It is the first live software release for the Lightning protocol; the software can facilitate Lightning transactions in bitcoin or litecoin. Developers are now quickly building apps for Lightning (called “Lapps”), including an ice cream delivery service.
Lightning Labs also closed a round of seed funding from a slew of big names: Square and Twitter CEO Jack Dorsey; litecoin creator Charlie Lee; Robinhood co-founder Vlad Tenev; and Digital Currency Group, the biggest cryptocurrency startup investment firm, helmed by Barry Silbert.
There’s all sorts of things that can be done when you have instant, high volume,” says Stark. “We’re talking many thousands of transactions per second, one day maybe even millions per second… Bitcoin at its base layer can’t do that. But Lightning, because it’s this layer on top of it, can.” Stark cites Visa’s transactions-per-second on its rails, and adds, “We want to go even beyond that.
For a few years now, onlookers have speculated that the bitcoin technology still needs a “killer app” — a reason for the average person to want to buy and use bitcoin, beyond just holding it as a speculative investment.
Lightning Network that is a true game-changer. It’s the layer on which new protocols and mainstream applications will be built, on which everyone will transact, where the killer app for Bitcoin will finally emerge. The Bitcoin blockchain will scale alongside Lightning, providing the immutable, trustless, secure, and censorship-resistant foundation that will have the final say on the legitimacy of every transaction we make.
As for the price of bitcoin, which is down a staggering 53% in 2018 so far, Stark says bitcoin is being unfairly compared to that all-time high from the end of 2017, and that people make too much of the price.
I kind of want things to calm down a bit — big price spikes aren’t good for us technical folks that are developing,” she says. “We are in the early days of bitcoin. This is a marathon, it’s not a sprint. I think people wanted it to be a sprint, but it’s going to take time.