Cryptocurrencies with Lightning Network

Bitcoin network processes around seven transactions per second, Ethereum 15, Ripple about 1500, and these can be compared to Visa's 24,000 per second and PayPal's 200 transactions per second. Blockchain networks are pretty slow currently and that makes it a huge problem if they are to support vast amount of transaction volume at high speed like say Visa network.

If you were transacting on a Bitcoin network, a transaction would take a minimum of around 10 minutes to several days in order to be confirmed. With each block always taking around 10 minutes to be mined on Bitcoin and each of those blocks holding only seven transactions, accumulation of "waiting" transactions is obvious in a busy network and the problem becomes worse if the network keeps growing in terms of transactions.

This problem can present major problems as seen in the past including high transaction fees and network clogging, which can affect usage of a blockchain network. In fact, the two issues can make it not a very viable alternative method of payment compared to fiat. For instance, transaction fees is higher when the network is busy as people need to pay more to have their transactions confirmed quickly.

With a block size of around 30 kb, Ethereum block takes only around 10-19 seconds to confirm and will carry on-board around 20 transactions on the main chain. Although all other blockchain networks are faster than Bitcoin, they are not as scalable to compete with fiat payment giants.

Scalability or scaling problem is not a segregated problem: it is tied to other factors such as decentralization, the amount of growth in the number of users and transaction volume, and of course, demand of a given crypto. For any team of developers and project management, it is an issue to be solved gradually with respect to these and other factors as crypto continues to attract masses.

How scalability is being solved

One of the ways of increasing the amount of time taken for a transaction to be confirmed is increasing the block size as seen in some Bitcoin forks, but that increases the amount of data that has to be sent and downloaded by a node. That means it can solve the problem only to some extent. The second solution of increasing confirmation time for transactions is off-chain solutions such as Lightning network for Bitcoin, Raiden network for Ethereum, and Trinity for Neo.

Off chain solution like Lightning Network do not require each transaction to be confirmed by each node in the network in order to go through. Transactions are confirmed by some nodes but this also limits decentralization, security and transparency of transactions, which factors are essential for an ideal blockchain network.

Lightning Network is a secondary layer that operates on a blockchain and can process an unlimited number of transactions and these transactions will not be recorded on the main chain. The secondary chain serves as a standard for smaller and low value transactions that are ideally very expensive to send and process on the main chain.

Ethereum also has proposed off-chain scaling solutions such as Raiden Network where private transactions are sent via 'State Channels' without broadcasting them to the main chain. Therefore, it is their version of Lightning Network.

Delegated consensus protocol, another scaling solution, also requires transactions to be signed by a fewer number of nodes acting as representatives instead of all. Like with Lightning Network, the problem of centralizing transactions around certain nodes is also imminent. The other solution to scaling problem is sharding where the network is divided into smaller, faster, more easily manageable parts called data shards.

Other solutions include Plasma Cash, which allow a user to focus on the blocks containing coins they care about. SegWit also removes signature data for each transaction, freeing up more space and capacity for more transactions, hence more transactions can be stored on the Bitcoin's 1MB block capacity. Signature data or digital signature that verifies the ownership and availability of the sender�s funds makes up almost 70% of the entire space.

Neo's Trinity is similar to Lightning Network and Raiden Network and uses state channels to increase throughput focusing on real-time payments, privacy protection and low fees for NEO assets.

That said, scaling solution can also affect decentralization of a network by limiting transactions to some and not all nodes, in addition to the fact that any one of them will need support of miners, developers, businesses and other stakeholders, and this can take months to agree upon.

Cryptos Using Lightning Network

Most cryptocurrencies are using delegated consensus protocol to scale where some members undergo testing and certification including proof of stake and proof of authority to run the delegated consensus protocol. By taking some transactions off the main chain. Lightning Network lightens the main chain's load and hence reduces congestion.

Federated, delegated, and practical proof of stake is also being utilized to solve scaling problems by streamlining consensus mechanism. In itself, Lightning Network could achieve over 1,000,000 in expected transaction per second. Below are some

Bitcoin

Bitcoin Lightning Network capacity has reached around 562 BTC or over $2 worth of transactions as at now, with around 5,625 nodes (only 0.6% of entire network).

Use of Lightning Network on the Bitcoin blockchain has been growing and has led to a decrease in transaction confirmation times and transaction fees. So far, it is facilitating near instant payments with transactions completed within seconds of sending.

Near instant micropayments, which were not possible on the Bitcoin network are also possible off-chain on payment channels, and with a fraction of fees. It is also expected to help Bitcoin network to exceed legacy payment rails in throughput (transactions allowed per second) in many orders of magnitude.

Currently, users are able to attach payment per action/click is now possible without custodians. Besides, it is enabling cross-chain atomic swaps between Bitcoin and other crypto blockchains without any 3rd party custodians as long as they support the same cryptographic hash function.

Bitcoin Private

Bitcoin Private has a larger block size compared to Bitcoin and thus has faster transaction speed. The block size is 2 MB while the block time is 2.5 minutes. With the Bitcoin Private network, the sender, recipient and other transactional metadata remain unidentifiable and that's what makes it a private coin.

Chips

Chips started implementation in Komodo platform and already has Lightning Network enabled in addition to SegWit. They target that the coin will be used in the Pangea Poker dAPP being developed by Komodo Platform. This platform is a decentralized Texas hold ‘em game application that will be run on the BET platform, the technology to drive Komodo Platform's gaming module. It has no pre-mine and hence allowed Lightning Network to be implemented in a fully functional currency, and ease of adaptability to any online gaming and gambling environment.

Although Pangea Poker will be their first application since it will be the only accepted coin on the platform, Chips project also hopes that the project can be integrated (or able to integrate) into any other gambling or gaming system willing to use Chips for microtransactions because it has low fees. It can also be employed by any service that wants to take advantage of its micropayments.

the crypto is based on SHA-256 used for the Proof-of-Work since it is almost a pure BTC fork, although it will switch to dPOW to ensure there won't be lack of hashing power for poker games and to combat lack of mining as mining rewards decrease. The block time is 10 seconds.

Groestlcoin

Thanks to the Lightning Network support on Groestlcoin, it is possible to send transactions at almost zero fees. For instance, one can transfer around 10,000 GRS at the fees of about between 0.000045 GRS and 0.00019 GRS depending on the wallet used. Like in all cases of lightning implementation, these lightning payments are also instant and private.

Groest, which launched in 2014, activated SegWit softfork as early as January 2017. A lot has been under development since then including iOS, Webwallet and Android wallets.

According to their roadmap, the crypto will be adding Groestlcoin C-lightning support on June 22. They will also add in Groestlcoin Explorer and GRSPay Lightning network support both of which will go to testnet. Also planned for an update this June are Groestlcoin Spark and Groestlcoin Lightning charge.

Litecoin

Litecoin and Bitcoin were among the first coins to utilize lightning network upgrade, a technology that also works for Vertcoin as well as many other coins in and not in this list. Litecoin's LN has more than 100 nodes at the present and last week, Coingate payment platform started Lightning Network trials with Litecoin.

According to the announcement about Coingate using Litecoin LN, the first merchant to use LN on Litecoin on Coingate was Surfshark, a VPN provider. The company said that it hopes that all their 4,500 of their merchants will be interested in integrating Lightning in order to reduce friction on both sides.

Litecoin also enabled, late last year, support for Casa Lightning Node, which is an all-in-one solution to run a node on the Lightning Network. This solution, created by creators of the Lightning Ramp solution that allows exchanges to hook to the Lightning Network so their users can do trustless and fast payments. It allows users to send and receive payments on the Bitcoin Lightning Network and open and close custom channels.

Nimiq

Nimiq is a peer-to-peer payment protocol for the internet or World Wide Web and is a third-generation protocol that combines the best of Bitcoin and Ethereum.

Being a browser-based protocol means users do not need to install the native software. It also allows users to do off-chain transactions by establishing payment channels with one another, thanks to the Hashed Time lock Contracts. Besides, there is no blockchain confirmation times to wait and the costs are extremely low.

They launched their Lightning Network testnet in the third quarter last year, followed by a Lightning Network bug bounty program, and integration of the LN features. The crypto then launched Lightning Network by end of 2018.

Ripple

Ripple is already handling 1,500 transactions per second but also in August 2017, the network in collaboration with Bitfury released a code that integrated Lightning Network into Interledger, which is Ripple's network that enables transactions between different blockchains.

Merging the two is part of a long term goal of enabling the cryptocurrency community to seamlessly trade between different cryptocurrency and to send funds to any blockchain from PayPal, Alipay, bank accounts and vice versa.

Stakenet

Stakenet added support for Lightning Network and Atomic Swaps and released an update in August last year. Combining of Lightning Network with Atomic Swaps allows users to do Lightning Swaps, which are instant and near fee-less cross-chain trades. They hope to achieve a trustless one-click Lightning Swap solution with a unique inter-operable peer to- peer solution. A Stakenet Lightning node validates transactions between two separate chains. Masternodes will also be supporting the separate chains and will provide Watchtower services.

Hosting one-click Lightning swaps on the XNS native blockchain will allow the use of the blockchain's second layer masternode collateral, thus solving the two issues raised in criticism of Lightning Network, namely decentralization and liquidity. Thus, those running masternodes will be able to use the collateral to generate fees from outing Lightning payments, becoming Watchtowers, holding other chains, providing Light Wallet TX broadcasting services and liquidity for the Lightning Network as a whole.

All services running on the Masternode network will generate fees paid in XSN although the lightning network will still convert on the background to any preferred cryptocurrency.

Vertcoin

Lightning Network was confirmed as working on Vertcoin network as early as May 2017 according to a tweet from Vertcoin. The implementation went to beta in June. Its Lightning Network is termed as LIT. It implements all coins into a single protocol making a single unified multi-coin lightning network rather than having a bunch of different lightning networks which introduces a fragmented subset of lightning networks. LIT is headed by Tadge Dryja, who is a co-author of the Lightning Network whitepaper at MIT-DCI.

The Crypto App box combines fiat banking, card payments and crypto payments and Vertcoin's system, according to their website can scale to meet the current UX of fiat payment systems.

Viacoin

Viacoin announced on Twitter in January last year that all tests relating to their Lightning Network were complete through the LND implementation. The Zap Viacoin wallet is also a Lightning Network wallet. Viacoin was the first crypto to implement the OP_CHECKLOCKTIMEVERIFY aka hodl protocol (the protocol enables someone to freeze funds so that they can only be spent after a given timestamp or block height), which is a crucial component for the Lightning Network and atomic swaps.

Their transactions are confirmed every 24 seconds and the low fees on the network is already making possible micropayments via the Zap wallet. Their C-lightning standard compliant implementation of the Lightning network protocol is also nearly complete.

Cryptos working on Lightning Network implementation

Counterparty

On Counterparty, which works like Ethereum, transactions were previously being done directly on the Bitcoin blockchain, but with payment channels, users are now able to perform near-instant and cheap transactions. Examples include swapping XCP for BTC. Lightning Network is, however, in early stages of development at Counterparty.

On July last year, news came up that Counterparty collaborated with Storj to use the latter's technology that supports Lightning Network that is enabled already on the Bitcoin Core. The Storj technology supports a unidirectional transaction of crypto-assets like SJCX and others but will be adding bidirectional transaction support in the future. Their new technology entered beta testing last year.

Divi Project

First of all, the Divi Project algorithm charges fees mostly based on the value of transactions, instead of based on the size in bytes. That's different from most PoW blockchains because miners expect to earn a share of fees.

Divi is POS (Proof of Stake), which uses a different mechanism that keeps inflation of fees in check and low. This makes microtransactions on Divi mainnet possible with very low fees, whether a user is doing micro-tips, IoT payments, pay-by-use transactions or pay-by-view transactions. But with micro-transactions comes a need for scaling, and that's where a Lightning Network implementation comes in.

Divi is planning to enable their own Lightning Network by upgrading their codebase soon, and there's speculation that they may even make a one-click installer for Lightning Nodes. According to a project's CEO Geoff McCabe, they currently are doing micropayments on their network while watching and waiting for the Bitcoin Lightning Network, and others to grow.Then, they can implement it in the best way possible when it matters more. According to him, their codebase can be upgraded easily and can be done without much drama. This is because there are no miners making money off of fees that might object to losing them.

Feathercoin

Feathercoin's Peter Bushnell said in a Reddit AMA held on June 25 that the cryptocurrency has everything it needed for off-chain and with on-chain atomic swaps already enabled and working, they were preparing for Lightning Network support. He said they would be porting the software to enable users to run their own lightning network nodes.

Feathercoin, which was forked from Litecoin and launched on 16th April 2013, allows merchants to accept payments at near-zero fee rates. It has iOS, Android and web wallets.

Particl

Particl hopes to enable Lightning Network to facilitate near-zero fee instant payments and sending as well as atomic swaps, all with support for thousands of transactions per second. This will, in addition to allowing sustaining of heavy traffic products, introduce paths for other cryptocurrencies to be used on Particl Marketplace without relying on third parties.

Their version of Lightning Network is known as Bling Lightning and it will have added support for CT and RingCT privacy transactions. These would make it possible for users to do anonymous atomic swaps and improve privacy within the Lightning Network.

Particl has other interesting planned and completed features: For instance, their decentralized marketplace that will support asset selling and buying is in the alpha stage since May 31 last year. The network has been supporting atomic swaps from as early as September 2017 and users can swap crypto from one blockchain to another for those blockchains already supported. It also has quantum-resistant cold staking.

Crypto with alternative implementations to Lightning Network

Digibyte

While everyone is still relying on off-chain scaling solutions, Digibyte believes that "on-chain" scaling is still possible and doable.
While Lightning Network can work on their blockchain, DigiByte believes that they do not need it. They are working on something else to scale.

DigiSpeed allows the block size to double every two years. With a current block size of 2 MB, they can process around 560 transactions per second, arguably, with a block time of 15 seconds. Using this solution lets them avoid the problems of centralization and need to trust third or other parties when making blockchain transactions as would result when Lightning Hubs are utilized.

Ethereum

Ethereum Network has proposed several different solutions to allow scaling. Raiden is one such and works as a version of Lightning Network by providing a second or extra layer on top of the main chain and the second layer allows users to open two-way channels to conduct instant and nearly fee-less transactions. Raiden is ERC-20 compatible, meaning all tokens issued on the Ethereum platform will work with Raiden.

The solution was rolled on testnet in September 2017 and the team behind it went on to raise around $50 mln for further development. A lighter version of it known as µRaiden or Micro Riden was deployed on the Ethereum mainnet and started facilitating instant, trustless and free transactions on the network. Micro Riden works by allowing the user to open one-way instead of a two-way channel payment, meaning the tokens can only be transferred in one direction and not back.

Further, Raiden network also went live on Ethereum mainnet last December for the alpha testing phase, making 1 million transactions per second a reality although not yet production ready. Red Eyes would allow for, among other things, the opening, topping up, closing and settling of payment channels; and doing single and multi-hop transfers, and automatic joining of token networks and opening channels with peers.

NEO

NEO is similar to Ethereum as a token platform. It brings StateChannels to the NEO blockchain and the state channels work in a similar version to those in Raiden and Bitcoin. It allows for off-chain transactions between two people on a private channel and the two can use smart contracts to do as many transactions back and off as they would like.

Like many other state channel-based transactions off the chain, it allows users to bundle and batch many transactions and only periodically write the end results to the blockchain instead of hosting each and every transaction on-chain, which takes more time and is very very costly for microtransactions. Off-chain transactions like these allow decentralized exchanges that charge fees once in a given time instead of for each transaction, which is a cool use case.

Stellar Lumens

Stellar Lumens creator Jared McCaleb started exploring Lightning features in 2015 and the cryptocurrency enabled the state channels then launched Lightning Network in December 2018. On the Stellar network, a user can transact Bitcoin without a third party exchange, thus increasing liquidity in the market.

Also, late last year, Interstellar announced the development of Starlight, their version of the Lightning Network and an implementation of bidirectional payment channels on Stellar, which works off-chain and allows parties to transact privately, instantly and securely at zero fees. It included a wallet and an interface that allowed users to create bilateral payment channels to use to transact Lumens.

A conservative estimate revealed that Stellar�s processing rate is 1000 operations per second.

Zcash

Zcash uses BOLT (Blind Off-Chain Lightweight Transactions) which is also inspired by Lightning Network but it allows making of multiple payments on the same channel with the payments not linkable with each other even by colluding parties. It can route payments via third parties while keeping participants and transferred amount in the transaction anonymous, but peer-to-peer payments are still possible.

Therefore, it seeks to solve privacy concerns around Lightning Network implementations while still enabling scaling of blockchain networks.

It will use two cryptography techniques that allow users to sign transactions without revealing what exactly is being signed -- they can hide the value of payment and signatures.

The protocol will also work on top of any other cryptocurrency that supports required cryptography primitives. It will also be able to work on Bitcoin but with some adjustments, but it performs best on top of an anonymous crypto like zCash.

David Kariuki

David Kariuki likes to regard himself as a freelance tech journalist who has written and writes widely about a variety of tech issues that affect our society daily, including cryptocurrencies (see cryptomorrow.com and coinpedia.org); climate change (cleanleap.com), OpenSim and virtual reality (see hypergridbusiness.com). He is currently pursuing a MSc in Environmental Management at Open University. He does write here not to offer any investment advise but with the intention of informing audience, and articles in here are of his own opinion. Anyone willing to use any opinion here as advise to invest in crypto should obviously take own responsibility and accountability of their losses (or benefits) thereof. You can reach me at eqariu@gmail.com or david@cryptomorrow.com

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