The Lightning Network will change the game for bitcoin by adding a layer on the blockchain. It will allow people to make many transactions off the chain without the block’s transaction fee.
Let’s see how it changes our world..
- The Lightning Network will lower the entry-level for using bitcoin. Instead of using Coinbase, a user can open up a channel at an exchange and make payments directly through that channel. That means that someone who has bitcoins way over in another account with only 0.001 worth of bitcoin in their account will be able to make payments without using a different service. The person can set up the channel on whichever exchange they want and then use that exchange for all future transactions.
- With the lightning network, the funding channels won’t constantly have to be funded by users. If the user never wants to make a transaction through the channel, they don’t have to fund it. However, if they want to make a transaction through the channel, it already has their money in it—the user doesn’t need to add more. It would be very beneficial for exchanges that deal with smaller transactions because at the moment, those exchanges have to be funded by dozens of channels.
- The lightning network will help merchants accept bitcoin payment and not require that buyer to have minimum bitcoin in their account. The payment processing would occur on the Lightning Network, so that the merchant’s balance doesn’t go down when the payment is made. This would allow smaller bitcoin-receiving businesses to do business with a clientele they usually could not—such as brick and mortar stores, which can’t accept digital payments.
- Yet another way the Lightning Network helps merchants is by allowing them to have a channel open for every customer. Instead of closing out every customer payment immediately to avoid small payments, they can keep it open and allow the customers to make purchases through that channel. It would be helpful for businesses such as coffee shops or restaurants—they could now accept tips on their phones when someone is ordering food or a drink.
- The Lightning Network will help miners not have to deal with as many transaction inputs and outputs. Since many system updates are off-chain, there will only be more room on the blockchain for transactions that need to go through — the rest can go through Lightning Network channels.
What Will The Future Be Like?
After the Lightning Network is implemented, all of these use cases will be possible. Then, people can convert their fiat currency into bitcoin and have a channel open with an exchange to make payments quickly.
Merchants can accept bitcoin quickly without having to constantly close customer channels as they do now. Customers will pay with Bitcoin even at brick and mortar stores.
Furthermore, the Lightning Network will also be helpful to larger businesses because they can make large payments more quickly without incurring as much risk or loss of value. It can be done by setting up a channel with anyone they need to pay, such as the accounts payable department, suppliers, producers, distributors, etc.
The Lightning Network will also be helpful for more advanced users of bitcoin who want to move their money around efficiently and quickly. They can set up channels for other people that they regularly transact with and then have those channels open all the time. Then, when those people want to send money through them, they can do that quickly without having to wait for confirmations.
So What Can We Do?
We should start thinking about how we would use these services together: Merchant integration, sidechains and payment channels, smart contracts — it’s all becoming possible now that we have the technology for it.
As you can see, the Lightning Network is a game-changer to the future of bitcoin and will allow us to do many things that we previously couldn’t without it. Just think about what kind of amazing things could be done once this technology is fully implemented.