If Stellar successfully implements the lightning network then is it okay to say that Bitcoin won’t be the only Cryptocurrency to use Lightning Network?
This year on March the Lightning Labs unveiled the beta version for the Lightning Network. The Lightning Network has been regarded as a solution to Bitcoin’s scalability issues. More importantly, the developments were very much welcomed by the community with an enormous optimism.
So, what happened next is that Stellar network team announce that they will be implementing the Lightning Network. Stellar is among the first projects to formally announce the implementation of the Lightning Network since the beta release.
The creators of Stellar Lumens have recognised a global and growing market demand for more private channel transactions. The Cryptocurrency platform has released it’s 2018 Roadmap and revealed plans to incorporate the high-volume micropayments enterprise, The Lightning Network to improve security and most importantly to enhance scalability. The Lightning Network is going to have a huge positive effect on the Stellar’s long-term scalability and security. In order to optimise the implementation, the Stellar and the Bitcoin Core are ready to collaborate to test the potential of Lightning Network on Stellar.
How does the Lightning Network operate with a Cryptocurrency?
The Lightning Network is a Decentralized system that utilizes smarts contract and also enables instant pay, nets across a large group of people. The Lightning Network is capable of carrying out millions to billions of transactions per second. And if you’re wondering how Lightning Network makes all of this possible. This kind of speed and scalability is possible because the Lightning Network doesn’t create on-Blockchain transactions for individual payments. However, the smart contracts have a possibility to be enforced on-Blockchain if there are any issues or if complications arise.
Stellar has been testing the Lightning Technology for a long time now. It’s been three years that the Stellar developers are exploring the possibility to implement Lightning Network. The reason why Stellar has invested a lot of time in the Lightning network is that cryptocurrencies like Stellar and Bitcoin will benefit a lot as the Lightning network successfully processes micropayment transactions with ease. And in order to keep the Stellar network efficient, Lightning network is very much important.
Same as the Bitcoin channels, the Stellar channels will be the off-chain avenue by virtue of which users can conduct payment and its procedures. Sky’s the limit here, there are going to be a lot of additional networks features as well like creating, even deleted or just simply changing permissions on accounts. The role of these channels is to make use of the source accounts as well as the sequence number in order to keep tabs on the payments before finalising the transaction which is sent to the network. A source account here represents a user’s account on a state channel along with the sequence number tracks the number and the sequence of the payments which are made within the channel. The new operation is supposed to enable transactions to arbitrary increase the number of the sequence of a target account.
The Stellar team is going to further release the developmental plans to show detailed state channels which can be used for “multi-hop payments” between the users without even establishing channels and the cross-chain atomic swaps. There is also an addition of inviting peer review along with the feedback from the community and the researchers to make things better as the present schematics are not yet finalised.
And after the Lightning Network is completely implemented, Stellar will be benefited in a lot of ways like:
The benefit of scalability, obviously.
With the Lightning network, there’s privacy benefits as well as the Lightning network keeps the transactions off the public ledger.
Then comes the interoperability in the prospect of Atomic Swaps.
The Lightning Network will add a lot of flexibility to the Stellar Network because an interoperable ecosystem is any day better for everyone.
Among the benefits that Lightning Network has in store, one of the most significant aspect of the Lightning Network is the ability to make trades across various blockchains. This feature in turn allows a user (who owns Stellar Lumens) to theoretically trade the the Lumens directly for Bitcoin without the involvement of the third party exchange. What happens next is that a new form of liquidity is created which wasn’t frequent previously and neither was it directly unavailable in the Cryptocurrency world.
This functionality is nothing but a resultant of smart contracts and these contracts are executed within a certain time frame depending on the accurate availability of the currency. There is always a chance of some mishappen or the other and if it fails to happen then the transaction is cancelled immediately and the spend currency is returned to its original owners. The trust-less factor of smart contracts avoids any sort of fraudulent transactions. And thus, the transactions carried across the chains are safe and secure and they even stay within a single chain.
Let’s face some bitter reality. Implementing the Lighting Network isn’t a piece of cake neither is it going to be as easy as flicking a switch. The source code isn’t compatible with stellar and on the other hand, the XLM development team have to create their own version of the software and Jeremy Rubin, Bitcoin’s Core developers have proposed that the only way to make Stellar compatible with the Lightning Network is by using the sequence number of the Stellar Network for off-chain payments. This is the only procedure as Stellar’s state channel implementation relies on the fact that every Stellar transaction specifies a source account and a sequence number. It has already been figured out as to how to use those sequence number as a natural versioning mechanism for off-chain payments. This process is similar to how the central and reserved banks get the alert for out-of-order cheques.
The engineering team behind Stellar are extremely confident about their approach regarding the iteration of the Lightning Network. They even claim that it might very well end up as a superior product as it can be used by the client to compete for any operation that can be done on the Standard Stellar network. Pairing up the Stellar’s asset functionality as well as features like Trustlines might prove to be extremely interesting and something new for the Cryptocurrency enthusiasts.
One of the most attractive aspects of Lightning Network adoption is the ability to make trades across blockchains. This would allow a user that owns Stellar Lumens to theoretically trade them directly for Bitcoin – without a third party exchange. This creates a new form of liquidity that was previously infrequent or directly unavailable in the cryptocurrency world.
This functionality is a result of smart contracts. These contracts are executed within a certain time frame, dependent on the currency accurately arriving. If that fails to happen, the transaction is canceled and all currency returned to its original owners. The trust-less factor of blockchain based smart contracts avoids any fraudulent transactions. In this way, transactions across chains can be as safe and secure as those within a single chain.
Since the initial release of the technology, the Lightning Network has been one of the most important upgrades to the blockchain functionality. Therefore, the early adoption of the platform’s cryptocurrency will correctly represent forward-thinking, progress and invest in the success of its products. These are powerful indicators of the long-term effectiveness of investments. Stellar is the first to continue to provide banking services for bank-free accounts while still creating value for its investors. Stellar is challenging other top cryptocurrencies to compete for top-level encryption of market capitalization. Their performance is impressive given their recent release – and with the decision taken by Lightning, it may continue.
The recent announcement is Stellar Launches StellarX a Free Asset Trading Platform on Stellar, which makes it fast and able to bring disjoint economies and blockchains into a single system.