Saturday, November 27

Why should your payments be with the Lightning Network? More from laBITconf 2021

Lucas Ferreira from Lightning Labs, and Dulce Villarreal, computer developer, were present at laBITconf 2021, where they led a presentation aimed at answering: Why should your payments be with the Lightning Network? To do this, they explained that Lightning Network is a protocol designed to improve the scalability of Bitcoin. This is possible because the Lightning Network works as a second layer on top of Bitcoin. One that allows this cryptocurrency to do things that it normally could not and more specifically, instant transactions and with very low commissions.

They commented that Lightning is Bitcoin, it is not another network, it is not another Blockchain. “Those bits of satoshis that are sent in Lightning is the only protocol that is Bitcoin,” said Villarreal while emphasizing that it was very important to understand it to understand the potential of this technology.

To understand a little the potential of this technology, we must keep two things in mind. The first is that Bitcoin was created as a digital money solution. The second is that this goal is impossible to achieve in the current state of the Bitcoin network and software. The reason for this is very simple: Bitcoin has trouble scaling.

For this reason, a new way of making transactions quickly was needed, that was easy to use and compatible with Bitcoin without making major modifications.

Lucas Ferreira de Lightning Labs, and Dulce Villarreal at laBITconf

Analogy recreated to understand the potential of the Lightning Network

Now, during the presentation, they highlighted that Bitcoin is an accounting record where all blockchain transactions are recorded and Bitcoin is the safest blockchain. Understanding this, they explained through a commercial analogy, that regardless of the size of the businesses, the Lightning Network can be used by opening a payment channel, through which hundreds of transactions will be made between two businesses, without the need to trust. one in the other precisely because of the properties that the network offers.

However, they stressed that to transact with someone in Lightning it is not necessary to have a payment channel with each person with whom you are going to transact. That is, once the channel is opened, its participants can exchange assets with each other instantly using the funds stored in said channel. This in a nutshell, means that parties involved in a Lightning Network payment channel can make payments to each other instantly.

What are payment channels on the Lightning Network?

Payment channels are the foundation of the Lightning Network. A payment channel is actually a multi-signature transaction on the blockchain with at least one of them sending funds. In this channel, each person has a private key and each future transaction can only be carried out if the keys of both parties sign. This as a means of consensus that the transaction has been approved to be executed by both parties.

They highlighted that Lightning is like giving Bitcoin superpowers, because now it is going to be ubiquitous. With Lightning you can reach the farthest corner of the planet. Anyone with a phone can use Lightning and Bitcoin, being accessible to everyone.

Now, you will think that if Bitcoin has such a powerful and extensive network then why should it improve its scalability. The short answer is: Because by improving scalability, transactions are done faster and are less expensive.

Opportunities that El Salvador gives to Latin America

During the talk, they also mentioned that Latin America has specific problems in the region, which are known to many people, but the fact that El Salvador has decreed Bitcoin legal is an opportunity for Latin America, because for the first time in history we see an unprecedented financial revolution.

«With Bitcoin and Lightning it is possible to invest in our future, for the first time everyone can invest thinking of a retirement for when they are old, or to pay a mortgage amortization payment, many people do not have the opportunity to do that in Latin America, because it doesn’t even have a bank account. With Bitcoin and Lightning this is possible ”, said Villarreal.

Lightning is uncensored

They also expressed that, with the Lightning network, the user does not have to ask anyone for permission to use it, they only have to download an application on their cell phone and that’s it, without giving up their data. Without confiscating Satoshi’s transaction amounts they have, also not freezing the balance. There is no censorship.

They highlighted that with Bitcoin and Lightning no one is illegal, “no human is illegal,” they argued. At this particular point, they made mention of immigrants in the world, specifically those in the United States, who, being migrants, are treated as second-class people.

They also noted that not only in the United States could this be seen, they took as an example the existing fact of Venezuelans in Argentina and Mexico who at some point have been treated differently, but rescuing that Bitcoin is for everything. “There is no room for racism, Bitcoin does not see the color of your skin, if you are a man or a woman, if you have documents or not. You can simply open a Bitcoin wallet and have access to this technology. ”

For his part, Lucas Ferreira, commented that Lightning allows making payments that were not possible before, payments in places where before people could not pay, because they did not have access, they were not banked, or for whatever reason. At the same time that it protects your privacy, offering high levels of security and anonymity. This is due to the fact that the transactions occur off-chain so that payments are practically impossible to trace. It is a tool of freedom and that everyone can use.

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