Will Lightning Network bring us hyperbitcoinization?
By Leo Zhang
Jun 25, 2018
One of the most exciting developments in the cryptocurrency space is the Lightning Network. Today, Blockstream announced a third Lightning implementation, c-Lightning in beta. While Lightning is still in development, the Bitcoin community has high hope for it to significantly increase the transaction speed and volume, making new types of business possible on Bitcoin. "Hyperbitcoinization" is the dream of an endgame for true Bitcoin believers, where Bitcoin is adopted by corporations and sovereignties. Will Lightning facilitate this process by making the experience of small businesses dealing with Bitcoin easier? The recent articles below argue the finer points of Bitcoin's "layer 2."
"But while the capacity and the number of nodes as well as channels are increasing steadily, the reliability of successfully routing a payment on the Lightning Network is still quite low, especially for larger amounts. The success rate for a payment for no more than a few dollars between random LN nodes is 70%."
"In particular I think the insights and techniques (Atomic Multi Path routing and Splicing) they talked about have a huge impact on the autopilot and the topology generation problems of the lightning network. Long story short the magic concept in my opinion is splicing. For those that are unfamiliar with the topic: Splicing is the process of updating the channel balance of a payment channel by adding or removing (partial) funds."
"Hyperbitcoinization is a state where Bitcoin becomes the world’s dominant form of money. Bitcoin is socially wired and can be adopted exponentially. As it gains traction it will seem to be an organic, self-organizing process. In the model shared below, Bitcoin is in the infrastructure buildout phase and an early form of money. However, when it passes a critical “tipping point” Bitcoin adoption, use and price will skyrocket."
"Central banks are engaging in unorthodox monetary experiments to stabilize financial systems and economies after the 2008 crisis. These experiments will eventually result in uncontrolled inflation. Countries with failing governmental institutions, like Venezuela, are currently suffering from hyperinflation. Bitcoin’s ultra-orthodox monetary policy of targeting a fixed money supply, with 80% of the total 21 million bitcoins already in circulation, is the ideal hedge for fiat money printing."
"Thus, running a masternode is financially incentivised, and one can begin to accrue a steady passive income given an appropriate strategy. Needless to say, it is a space rife with opportunity but also pitfalls, and rarely is it ever as easy as simply selecting a masternode coin, buying the collateral and watching the income pour in."
1/ I have this theory that if there is ever an Ethereum app which is a breakout success, either: 1) its needs will come to dominate the development direction of the platform or 2) the app will depart for a friendlier chain it can control (or create a new one.)
"One part of the problem is a lack of care on the part of investors. This was an issue highlighted by Joe Rotunda, enforcement director for the Texas State Securities Board. And it's an especially acute one set against the backdrop of a huge rise – and subsequent fall – in the value of cryptocurrencies over the past six months."
"Every tradeoff in a billion-dollar market is going to hurt someone. In this case, on the one hand, you’d want the stereotypical 'Venezuelan with a GPU miner,' who’s providing for their family with Zcash, the opportunity to keep doing so; on the other, ASIC mining means more dedicated hardware keeping the entire Zcash network more secure. Onn the gripping hand, drastic changes in mining capacity raise the spectre of a 51% attack."
"Since late 2013, this band of cybercriminals has penetrated the digital inner sanctums of more than 100 banks in 40 nations, including Germany, Russia, Ukraine, and the U.S., and stolen about $1.2 billion, according to Europol, the European Union’s law enforcement agency."