Will the infrastructure development of the Lightning Network stop recession in the cryptocurrency market?

Infrastructure Lightning Network is developing rapidly. So, if a year ago only a few dozen nodes worked in this second-level network, now the number of the latter is approaching 6000, and the number of payment channels has already exceeded 22,000.

Lightning Network (LN) is one of the most important solutions for scaling Bitcoin, reducing transaction fees and increasing the confidentiality of payments. Many experts are convinced that the development of this technology will contribute to the mass adoption of cryptocurrency.

Lightning Network (LN) is one of the most important solutions for scaling Bitcoin, reducing transaction fees and increasing the confidentiality of payments. Many experts are convinced that the development of this technology will contribute to the mass adoption of cryptocurrency.

Infrastructure development Lightning Network was one of the most rapidly developing processes in the second half of 2018. Significant progress in development and implementation has increased the excitement around the technology, as well as the expectations that this year will mark a significant development of the network.

The challenge for the Lightning Network is simple: to enable users to make offline payments as quickly and reliably as possible. At the same time, solutions should be intuitive and simple for the average user.

The main focus of technology development in 2019 is centered around four areas:

• increase system security
• maximize liquidity
• increased privacy
• improved user experience

Lightning Network Infrastructure and Products

It is important to start with the infrastructure: this is where the main part of the development is laid, laying the foundation for both future payments and more advanced developments.

The most popular LN clients are lnd from Lightning Labs (written in the Go programming language), Eclair from ACINQ (Scala), and c-lightning from Blockstream (in C).

New interfaces, such as Pierre Rochard's Node Launcher, make it easy to install Bitcoin and Lightning nodes with very simple graphical interfaces. These nodes can then be integrated with multiple wallets, including Zap, Spark, Wallet of Satoshi, etc. User-oriented products such as Bitrefill are aimed at simplifying the opening and funding of channels.

Casa Node is a “boxed” bitcoin and lightning node that will look great in your apartment. Similarly, ACINQ BTCPayServer, OpenNode, Coingate, Globee and Strike allow developers to easily integrate LN payments.

Lightning Joule is a MetaMask-like open source wallet created by Will O’Birn. With it you can easily make LN-payments using the browser.

Lightning Joule Wallet Interface

While it is in the alpha version, however, the outlines of the future user interface are already visible, in which, perhaps, a solution for identification will be presented. It also displays some elements, as in some Ethereum-based dApps. A number of applications have already been integrated with Lightning Joule, including lightningspin and LN Chess from LightningK0ala.

There are some fun and uncomplicated products that use Lightning. My favorite demo versions of LN solutions are the Microbet prediction market and the Y’alls blogging platform where micropayments can be made.

It is important to note that the LN technology is not yet mature. Further enhancements to developer tools, including WebLN, simplify integration and reduce entry barriers.

Technical improvements

The LN development achievements were demonstrated last year at the second Lightning Development Summit in Adelaide Australia. Just two years after the presentation of the original specification of the Lightning Network in Milan, the LN v 1.1 version was presented along with dozens of technology proposals.

Since Lightning is built on top of Bitcoin, many of its future improvements are related to subsequent technical improvements to the first cryptocurrency protocol.

Most of the improvements in the latest Lightning specification focus on the following key areas:

• convenience and ease of use
• security
• liquidity provision
• confidentiality

Achievements in these areas are at different stages - from proposals to working implementations. Implementation of a significant part of these improvements is expected during this year, which promises to be significant for the Lightning Network.

Neutrino

Unlike nodes with a complete transaction history, light nodes synchronize only block headers using the Simple Payment Verification (SPV) method. Features of the latter are described in white paper bitcoin.

The capabilities of mobile devices are limited, so light nodes are used for them. To verify transactions, such nodes connect to full nodes. This process uses the Bloom filter — the client sends this data structure to the full node, which then returns a set of relevant transactions. Those, in turn, are checked by wallets locally.

Unfortunately, this process implies a reduction in the level of confidentiality, since the node can determine the addresses of the wallets. In addition, malicious nodes may reject certain transactions. Since Lightning transactions take into account onchain events, this approach can be fraught with some problems.

To solve this problem, CTO Lightning Labs Olaoluva Osuntokun ( roasbeef), Alex Axelrod and Jim Posen, presented Neutrino. This experimental lightweight client is designed to “minimize the required resources, including the amount of memory for storing data, while maintaining the required degree of confidentiality” through BIP 157 and BIP 158.

Neutrino uses Golomb code sets (GCS filters). Such filters provide a greater degree of compression, making Neutrino customers less resource intensive.

Neutrino is currently in active development. Its full-scale implementation is expected this year. Currently, users have to use the full node to work with a Lightning wallet. The alpha version of Neutrino is already available in the LND client, as well as in LN applications.

After the full launch of Neutrino, mobile LN wallets will be able to provide users with an extremely simple interface. In addition, the time required for synchronization will be reduced to minutes and Lightning users will no longer have to run full nodes.

Submarine Swaps

This technology was developed by Alex Bosworth, and the original name was given to her by the aforementioned roasbeef.

Now, most wallets make a clear distinction between onchain funds and bitcoins transmitted over LN channels. Submarine Swaps is a way to make a much smoother interaction between off-and-on-payments.

Despite the fact that these bitcoins are in principle interchangeable, onchain-tools cannot be used to perform Lightning transactions. Submarine Swaps enable users to send LN transactions to a trustworthy intermediary who then performs on-mine operations, and vice versa.

Such intermediaries may charge a fee. The possibility of theft of funds in transactions of this type is excluded, since the processes occur atomically. Submarine Swaps can also be used in crossbar atomic swaps, allowing users to exchange BTC for LTC or, for example, BCH.

Submarine Swaps also largely offset the problem of routing imbalances. Despite the fact that this technology seems to be a temporary solution in the light of the possible emergence of more advanced technologies, it already exists today and can significantly improve the user experience with the atomic displacement of BTC existing on onchain and offchain balances.

Bilateral funded channels

Currently, LN channels can only be funded by one party. Suppose Arjun and Mike want to open a channel between them. Arjun placed 0.1 BTC on this channel. Now he can send Mike payments, and also pave the way for these payments through the latter. However, he cannot receive payments directly from Mike or along a route through him until he completes the funding transaction.

Finding sources of incoming payment capacity can be difficult, and at the current stage of development of the Lightning network, this process often requires coordination among participants. When using bilateral funded channels, Arjun can fund a 0.1 BTC channel if Mike also puts 0.1 BTC in it.

This process is costly: opening a channel requires an onchain transaction, there are also costs of lost profits (funds are diverted from circulation). Nevertheless, Mike can receive routing fees earned by providing liquidity to the network.

Community representatives often express fears that such commissions may be too low and not stimulate the interest of large liquidity providers (for example, merchants). Liza Neigut’s proposal for development is designed to allow channels to signal their willingness to provide inbound capacity for Lightning channels.

Bilateral-funded channels are already supported by the LND client, but it’s still far from the full implementation of this solution. With the growing adoption of technology, such channels will allow even major players like exchanges to facilitate the involvement of users in the Lightning Network, bringing liquidity into the channels.

Atomic branched payments

This technology was proposed by roasbeef and Conner Fromknecht. Developers are wondering:

“I have five channels with two dollars in each. Can I atomically make a payment of $ 6? ”

Suppose payments are made only along a single path: from the Arjuna Channel, through the Mike Channel, to the Larry Channel. With small transactions, there are usually fewer problems, especially if there is enough liquidity in each channel for smoothly routing payments. If Arjun funds are distributed through several channels, then he has limited access to liquidity.

Atomic branched payments (Atomic Multi-Path Payments, AMP) solve this problem by allowing multiple partial payments to pass through various channels. Small parts of the payment can be delivered to the recipient only if the remaining amounts pass. This avoids the problem of partial payments.

Thus, at the exit to the recipient comes the full amount of funds. It uses the same security mechanisms as for payments that go through a single way.

And although the AMP specification has not yet been finally approved, there are already proposals such as OG AMP and Base AMP. The full-scale implementation of AMP will significantly improve user experience with payment routing and increase the level of liquidity of the Lightning Network.

Splicing

At present, in order to increase the channel capacity or replenish it with an on-line transaction, it is necessary to close the channel, and this also takes time. A new proposal called Splicing presented by Rusty Russell last October. The solution is designed to allow users to negotiate an on-line transaction to add funds to or withdrawal from the channel.

Many LN wallets now have both onchain and offchain balances. After a full-scale implementation of Splicing, users will be able to send on-line transactions using funds from off-line balances.

With the help of splicing, users will also be able to directly contribute to the channels. This greatly increases the efficiency of network routing, providing flexibility in managing channel balances.

Splicing can significantly improve the efficiency of Submarine Swaps, since this solution makes it possible to eliminate the intermediary in the payment process. A powerful synergy effect is created: AMP in tandem with Splicing allows users to receive invoices for payment to their Lightning wallets, make payments, and allow the wallet to withdraw funds from on-line balances and off-line channels. At the same time, everything will happen smoothly and without the need for manual liquidity management.

Wumbology

Wumbology is a reference to the episode of the animated series 'Sponge Bob Square Pants,' where Patrick Star invents the word meaning 'big.'

In the context of the Lightning Network, this means that the channels are getting bigger. In the current LN network, the channel size is limited to 0.16 BTC and the payment limit is 0.04 BTC.

The essence of the solution lies in the fact that as the degree of development security increases, information will appear indicating that the channel capacity increase is available to the client. Wumbology is designed to increase the overall liquidity of the network as channel capacity increases. It will also improve the routing of payments in the system.

The Lightning network started off quite adventurously. In other words, at the beginning of the development of the network in early 2018, LN-developers warned about the immaturity of decisions and that funds could be lost. However, the proposal to increase channel limits is an important step for the further development of the network.

Sphinx-send

Recently, roasbeef offered a feature called Sphinx-send.

Arjuna Mike Mogul doveryat Gerland place, Firework confine or znayut Gulsira vladeltsev kanalov home, following prohodyat transfer payments. Q tselyu povışeniya Privacy Sphinx settlement pozvolyaet skrıvat You have e'ri process otpravitelya.

In addition, the development of Sphinx allows Lightning to work without prior requests for invoices. The solution is currently under development, it needs updating of the nodes for its implementation. Sphinx has the potential to create new types of payments, as well as significantly improve the user experience.

eltoo and Channel Factory

eltoo is a protocol that c-lightning and Lightning Labs proposed in April 2018. In the current implementation of LN, a user may lose funds if he recovers data from an outdated backup. Transferring such old balances is akin to fraud; users may lose their funds in the payment channel as a punishment.

It is worth emphasizing that Watchtower backups and / or other continuous backups largely eliminate this problem. In the case of eltoo, if the user transmits the old state, his counterparty will be able to send a transaction that will adjust the final balance. Such an arbitration system “makes it much easier and more efficient to open payment channels between many users, which requires one on-line transaction,” the Bitcoin Optech newsletter says.

Even more importantly, eltoo makes backups more secure and Watchtowers more efficient, since only the latter state will need to be kept, not all the previous ones (however, this solution involves various privacy compromises).

Also, eltoo is paving the way for future innovations, such as Channel Factories. Now the operation of the Lightning channel involves two onchain transactions - for opening and closing. Channel factories are designed to optimize this process.

This solution will allow network participants to open an unlimited number of so-called intra-group channels (or “sub-channels”). First of all, Channel Factories can significantly reduce the total number of on-line transactions required for LN channels, especially as large market players adopt this technology.

The implementation of both solutions requires softforka using SIGHASH_NOINPUT_UNSAFE (BIP 118). According to many developers, these solutions will pave the way for another, more meaningful softfork (perhaps with the implementation of Schnorr signatures).

Replacement glavnıh argumentov kritikov, zvuçavşih na rannih etapah Lightning Network, a puzzled what exactly sformulirovat: a privedut Lea High Commission for kids. Onçeyn-transaction centralization Lightning? Channel Factories, pozvolyayusçie legko otkrıvat zakrıvat Canal Drive vk.com/cars.baku likely to count. Posleduyusçie onçeyn-uluçşeniya, vklyuçaya podpisi Şnorra, pomogut sjimat dimensions subscriptions, something sdelaet Lightning More Bole dostupnım.

"Watchtowers"

“Watchtowers” provide users with an additional guarantee that they will not be deceived by their counterparties on the LN network.

The solution was first described in white paper Lightning, but over time this model has been greatly improved. One of the problems in the early stages of the development of the LN network could be formulated as follows: “since payments are made of ofchanes, what if the second party deceives me by transferring an invalid state (for example, if I am offline)?”.

Attracting third-party resources in the form of Watchtowers to monitor malicious actions is one of the possible solutions to this problem. A similar solution is implemented in other systems of payment channels. For example, in the context of Raiden (Ethereum), they are called “monitoring services”.

In the Watchtower system, when a channel is open for Arjun and Mike, the former can transmit a signature allowing all funds to be returned to Arjun in the event of Mike’s malicious activities. The transmitted data must be sufficient to detect invalid states, and an appropriate degree of confidentiality must be maintained. For example, if Mike transmitted incorrect state information (the funds were blocked for some time), Arjun has the opportunity to receive all the funds deposited in the LN channel.

At first glance, this decision involves centralization. However, the Watchtowers are not part of the main protocol. They will be launched and managed by third parties (although advanced users can launch their own Watchtowers through the full node).

In the future, the Watchtowers will be able to charge fees for monitoring transactions, since the work of this decision involves some costs. Exchange and other major market players will be able to arm themselves with this decision. Nevertheless, the mechanics of the 'towers' imply some compromises in terms of confidentiality.

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As you can see, the progress in the development of infrastructure Lightning Network is not in place. However, given the current price of Bitcoin, the effect of these fundamental developments is not immediately apparent.

I would like to believe that all these new decisions in the medium and long term will facilitate mass adoption of Bitcoin not only as a tool for diversifying the financial portfolio and a means of preserving value, but also as an effective intermediary in exchanging people in goods and services. This will largely depend not only on large market players, such as exchanges, merchants and payment processing, but also on ordinary users who have not lost faith in the future of new technologies.