Lightning Network and other 2nd layer solutions
The Lightning Network is a protocol designed to speed up transactions and help Bitcoin’s technical limitations in regards to scaling. Currently, as we discussed in a last week’s article, the Bitcoin network can only process less than seven transactions a second, as opposed to thousands traditional payment processors handle today.
The off-chain protocol is based on payment channels and multi-signature technology which could theoretically speed up transactions to near instantaneous time frames. With a little help from Segregated Witness (Segwit), the Lightning developers say they can “deploy the most efficient, flexible, and safe channel design.”
Lightning Network is already operational on a test-net but is getting bigger extremely fast. At the time of writing the Lightning Network has already 2701 Nodes (similar to Bitcoin’s nodes, the full programs that validate transactions) that create 7471 channels between them. You can check out for yourselves the progress of the network on this interactive world map.
Other Crypto Currencies embracing 2nd Layer Solutions
Bitcoin is not the only Crypto Currency that plans to incorporate 2nd layer solution to scale transactions. Stellar, the eighth biggest crypt currency in terms of capitalisation, announce that some sort of 2nd layer solution is in Stellar’s 2018 Roadmap. On this roadmap blog post it is said ‘‘Of course, unlike Bitcoin, Stellar doesn’t need “saving” . . . we’re just going from a good place to an even better one.’’
Several cryptographers working on the privacy-minded crypto currency Zcash, as an example, have proposed BOLT, a new type of lightning-style micropayments tech that also preserves the network's anonymity. And project developers have hinted the technology is being worked on, even though it's not clear when it will launch.
Ethereum’s Raiden network, which has been in discussion since 2015 - is one part of Ethereum’s solution to that problem. Inspired by Bitcoin’s Lightning Network, the technology would shift the majority of transactions off of the Ethereum blockchain to create an alternate network of peer-to-peer payment channels.