TD₿: Bitcoin Turning into a Multi-layered System is the Most Interesting Thing in Crypto by Berkes Kessels
TL;DR Bitcoin needs to be a very secure, very solid, very stable layer to secure the funds for all the layers on top of it.
Hey Bitcoiners,
“Bitcoin can’t scale — it only does 7-10 transactions per second!”
If I had 1 bitcoin for every time I’ve heard this, I would be on a beach somewhere with my kids, with a fat stack of sats, just waiting for hyperbitcoinization.
All you can really do is shake your head and roll your eyes when you hear this argument against Bitcoin.
First off, it flies in the face of reality. Bitcoin is scaling…today! It’s estimated that over 46 million Americans own bitcoin. With trading volumes much higher than the run-up in 2017, Bitcoin’s transaction fees and network congestion have remained low, signaling that Bitcoin has made scaling improvements over that time frame.
Secondly, these scaling improvements are the result of recent upgrades to the protocol like SegWit which enabled the creation of second-layer scaling solutions like the Lightning Network.
The Lightning Network is a second-layer payment protocol built on top of the Bitcoin network that optimizes for speed and cost while taking advantage of the base layer’s security. Theoretically, the Lightning Network can allow for millions of transactions per second that can settle at practically no cost.
The important point here is Bitcoin will scale not through cramming everything onto the base layer, but in layers on top of it that offer different tradeoffs in functionality, efficiency, and security. But deep down below, Bitcoin is the base layer that ensures value is transferred with finality.
Berkes Kessels wrote this blog post that explains why he’s excited about Bitcoin becoming a multi-layered system (02/09/2018).
Through layers, Bitcoin will continue to scale, making all competing cryptocurrencies obsolete in the process.
Tick tock next block,
Cory Klippsten
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Quote of the Day
“Bitcoin developers have elected to scale in layers, such as the Lightning Network, which allow us to do transactions that don't need to be processed by ~everyone~ in the network.” - Danny Diekroeger, Bitcoin Software Engineer
Meme of the Day
Tick tock
Do we expect the challenges of scaling Lightning to be resolved anytime soon? I see this as the potential blocker for progress and the point that is brought up by naysayers. Unfortunately they have a point. I can see "Lightning's potential throughput" all the time, but I haven't seen anything at scale and only articles that present the problems lightning has at scale. Does anyone have some input on this?