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Bitcoinâs revolutionary Lightning Network has seen two major rollout initiatives begin in the last month, with new access for both the Southeast Asian region and Coinbase worldwide; nevertheless, it faces increased criticism that the entire protocol is fundamentally flawed.
The Lightning Network is a Layer-2 protocol being developed on Bitcoinâs blockchain with the ambitious aim of trying to solve Bitcoinâs scalability problem. Since the theory behind this protocol was first developed in 2016, it has seen major attention from the entire industry as a revolutionary new potential future. Essentially, Lightning seeks to further embrace the decentralized nature of Bitcoin by relying on a mesh network of locally hosted nodes to carry out its main functions. Microtransactions of BTC are made by various users, and they are processed through these nodes; smart contracts enforce a system where these tiny transactions are shuffled around and bundled. Then, these larger bundles are actually processed directly on the original blockchain, so congestion there is minimized and itâs feasible to use Bitcoin for everyday transactions. Since development began, large and influential figures have endorsed the project; most famously, El Salvadorâs government uses Lightning to make Bitcoin an accessible payment option for its whole citizenry.
Despite the early hype for the program, a persistent viewpoint that the project has stagnated has been on the rise. Going back years, multiple defenses of Lightningâs long-term viability as a concept have also acknowledged its setbacks, claiming that the technology might not be sufficient as a âsilver bulletâ to solve the scaling problem itself. Even as the network grew to its largest heights, a series of problems remained unshakeable. For example, smaller nodes may not have the practical capacity or startup capital to actually move usersâ money around; bugs hinder the user experience; merchant access is somewhat lacking; as well as other concerns.
Although these problems have been well-known, by April 2024, a few signs are leading community members to question if a breaking point has come. A series of long-term developers have publicly quit the project and denounced its flaws, and this list includes both the protocolâs original authors. As Paul Sztorc, Lightning developer and CEO at Layer Two Labs, put it, âeveryone now admits that you cannot onboard 8 billion peopleâ to Lightning, a âmicroscopicâ amount of total Bitcoin is actually available on Lightning, and most damningly, âalmost everyone who uses the real thing dislikes itâ amidst a series of complaints. Indeed, a particularly concerning statistic on Lightningâs future prospects has emerged, as the networkâs capacity for Bitcoin is steadily dropping even as its dollar capacity is at an all-time high.
Source
Nevertheless, these problems have not led the community as a whole to consider the project finished. For one thing, some long-term developers have displayed continued optimism and willingness to keep building, and the determined spirit of Bitcoin has not left Lightning yet. More to the point, however, major progress is being made in the field of reliable market accessibility. In March 2024, Lightning company Neutronpay secured $1.5 million in venture capital bridge funding to deepen network infrastructure and viability in Southeast Asia. Continued projects like this are vital to ensuring that users in less-developed regions are still able to access secure nodes.
This victory pales in comparison to the events of April 3rd, however, as Coinbase finalized a secure partnership to roll out Lightning on its platform. Coinbase has voiced its general support for Lightning access for several months, but only a concrete agreement with a partner like Lightspark can turn this support into access for the exchangeâs worldwide user base. Coinbase is one of the largest exchanges in the world, with more than $150 billion in transaction volume on a quarterly basis, so combining its vast resources with Lightsparkâs specific technical know-how is sure to create durable node infrastructure. One of the biggest concerns for the network as a whole is the myriad problems that faulty nodes can create, so Coinbase will surely be a bulwark in that respect.
The whole situation for the Lightning Network bears remarkable similarities with Ordinals, another popular Layer-2 protocol for Bitcoin. Rather than create a platform to process Bitcoin microtransactions as regular payments, Ordinals instead seeks to transform BTC into a more durable microformat, not to be spent in regular payments. Ordinals is able to âinscribeâ unique data onto individual denominations of bitcoin, which enables popular new tokenized assets to exist integrated with the leading blockchain. Of course, the project is not only used for these tokenized assets, as the inscription can be used to incorporate a huge variety of information into the indelible blockchain. In a particularly memorable episode, some developers even use Ordinals to inscribe discontinued video games.
Download the full 20-page research report prepared by Tuur Demeester (Founder, Adamant Research) for Unchained.
This entire concept has drawn a fair share of ire from certain sectors of the community. Influential developer Luke Dashjr, for example, claimed that the entire rationale behind Ordinals is a âvulnerabilityâ in Bitcoin, one that is being âexploited... to spam the blockchain." The popularity of the Ordinals BRC-20 token has even been linked to major congestion issues in Bitcoin, and Dashjr proposed a way to âfixâ this alleged vulnerability and sabotage Ordinalsâ continued functioning. Even as the network congestion has declined, the whole concept still sees pushback. Binance quoted their âongoing efforts to streamline product offeringsâ as a rationale for completely removing Ordinals from their platform in April.
The criticism of Lightning does substantially differ from that of Ordinals, to be sure. Lightningâs detractors call it a failed attempt to help Bitcoinâs usability, while Ordinalsâ critics see its success as a threat to the same goal. Nevertheless, there are a number of similarities between the two positions: both have developed a cadre of vocal opponents, and both have seen recent practical setbacks to their overall capacity. Developers on Bitcoinâs blockchain have always been an eclectic bunch, holding a wide variety of entirely different viewpoints on how to make Bitcoin better. Especially considering that the world of Bitcoin is both global and leaderless, itâs no wonder that these complex Layer-2 protocols step on a few toes.
And yet, neither one of them is completely defeated. Dashjrâs proposal to disable Ordinals was firmly rejected by the community, and development continues. In an impressive turn, the trillion-dollar finance giant Franklin Templeton even endorsed Ordinals with a report from their Digital Assets Division. This report claimed that Ordinals was driving a ârenaissanceâ in Bitcoin adoption and that the new Ordinals products have both energized Bitcoinâs user base and clearly demonstrated the blockchainâs flexibility and superiority over its competitors. Praise like this from such an important source could truly be groundbreaking.
Events like this serve, more than anything, to prove once again that Bitcoinâs spirit is not merely posed to disrupt established industries and build a more rational order on the wreckage. Developers from around the world also have a determined ability to keep working on a project in the hard times, and this spirit has served us well on Bitcoinâs rocky road to the top. Lightning and Ordinals developers have both shown a continued ability to refine their projects despite great adversity, and that spirit has been rewarded with newfound institutional acceptance. Itâs unclear at present where exactly either of these projects will go from here or if a newer Layer-2 solution will eclipse them both as the next revolution in Bitcoin. No matter what happens, however, itâs clear that Bitcoin as a whole will be stronger for it.
Full story here:
Bitcoinâs revolutionary Lightning Network has seen two major rollout initiatives begin in the last month, with new access for both the Southeast Asian region and Coinbase worldwide; nevertheless, it faces increased criticism that the entire protocol is fundamentally flawed.
The Lightning Network is a Layer-2 protocol being developed on Bitcoinâs blockchain with the ambitious aim of trying to solve Bitcoinâs scalability problem. Since the theory behind this protocol was first developed in 2016, it has seen major attention from the entire industry as a revolutionary new potential future. Essentially, Lightning seeks to further embrace the decentralized nature of Bitcoin by relying on a mesh network of locally hosted nodes to carry out its main functions. Microtransactions of BTC are made by various users, and they are processed through these nodes; smart contracts enforce a system where these tiny transactions are shuffled around and bundled. Then, these larger bundles are actually processed directly on the original blockchain, so congestion there is minimized and itâs feasible to use Bitcoin for everyday transactions. Since development began, large and influential figures have endorsed the project; most famously, El Salvadorâs government uses Lightning to make Bitcoin an accessible payment option for its whole citizenry.
Despite the early hype for the program, a persistent viewpoint that the project has stagnated has been on the rise. Going back years, multiple defenses of Lightningâs long-term viability as a concept have also acknowledged its setbacks, claiming that the technology might not be sufficient as a âsilver bulletâ to solve the scaling problem itself. Even as the network grew to its largest heights, a series of problems remained unshakeable. For example, smaller nodes may not have the practical capacity or startup capital to actually move usersâ money around; bugs hinder the user experience; merchant access is somewhat lacking; as well as other concerns.
Although these problems have been well-known, by April 2024, a few signs are leading community members to question if a breaking point has come. A series of long-term developers have publicly quit the project and denounced its flaws, and this list includes both the protocolâs original authors. As Paul Sztorc, Lightning developer and CEO at Layer Two Labs, put it, âeveryone now admits that you cannot onboard 8 billion peopleâ to Lightning, a âmicroscopicâ amount of total Bitcoin is actually available on Lightning, and most damningly, âalmost everyone who uses the real thing dislikes itâ amidst a series of complaints. Indeed, a particularly concerning statistic on Lightningâs future prospects has emerged, as the networkâs capacity for Bitcoin is steadily dropping even as its dollar capacity is at an all-time high.
Source
Nevertheless, these problems have not led the community as a whole to consider the project finished. For one thing, some long-term developers have displayed continued optimism and willingness to keep building, and the determined spirit of Bitcoin has not left Lightning yet. More to the point, however, major progress is being made in the field of reliable market accessibility. In March 2024, Lightning company Neutronpay secured $1.5 million in venture capital bridge funding to deepen network infrastructure and viability in Southeast Asia. Continued projects like this are vital to ensuring that users in less-developed regions are still able to access secure nodes.
This victory pales in comparison to the events of April 3rd, however, as Coinbase finalized a secure partnership to roll out Lightning on its platform. Coinbase has voiced its general support for Lightning access for several months, but only a concrete agreement with a partner like Lightspark can turn this support into access for the exchangeâs worldwide user base. Coinbase is one of the largest exchanges in the world, with more than $150 billion in transaction volume on a quarterly basis, so combining its vast resources with Lightsparkâs specific technical know-how is sure to create durable node infrastructure. One of the biggest concerns for the network as a whole is the myriad problems that faulty nodes can create, so Coinbase will surely be a bulwark in that respect.
The whole situation for the Lightning Network bears remarkable similarities with Ordinals, another popular Layer-2 protocol for Bitcoin. Rather than create a platform to process Bitcoin microtransactions as regular payments, Ordinals instead seeks to transform BTC into a more durable microformat, not to be spent in regular payments. Ordinals is able to âinscribeâ unique data onto individual denominations of bitcoin, which enables popular new tokenized assets to exist integrated with the leading blockchain. Of course, the project is not only used for these tokenized assets, as the inscription can be used to incorporate a huge variety of information into the indelible blockchain. In a particularly memorable episode, some developers even use Ordinals to inscribe discontinued video games.
Download the full 20-page research report prepared by Tuur Demeester (Founder, Adamant Research) for Unchained.
This entire concept has drawn a fair share of ire from certain sectors of the community. Influential developer Luke Dashjr, for example, claimed that the entire rationale behind Ordinals is a âvulnerabilityâ in Bitcoin, one that is being âexploited... to spam the blockchain." The popularity of the Ordinals BRC-20 token has even been linked to major congestion issues in Bitcoin, and Dashjr proposed a way to âfixâ this alleged vulnerability and sabotage Ordinalsâ continued functioning. Even as the network congestion has declined, the whole concept still sees pushback. Binance quoted their âongoing efforts to streamline product offeringsâ as a rationale for completely removing Ordinals from their platform in April.
The criticism of Lightning does substantially differ from that of Ordinals, to be sure. Lightningâs detractors call it a failed attempt to help Bitcoinâs usability, while Ordinalsâ critics see its success as a threat to the same goal. Nevertheless, there are a number of similarities between the two positions: both have developed a cadre of vocal opponents, and both have seen recent practical setbacks to their overall capacity. Developers on Bitcoinâs blockchain have always been an eclectic bunch, holding a wide variety of entirely different viewpoints on how to make Bitcoin better. Especially considering that the world of Bitcoin is both global and leaderless, itâs no wonder that these complex Layer-2 protocols step on a few toes.
And yet, neither one of them is completely defeated. Dashjrâs proposal to disable Ordinals was firmly rejected by the community, and development continues. In an impressive turn, the trillion-dollar finance giant Franklin Templeton even endorsed Ordinals with a report from their Digital Assets Division. This report claimed that Ordinals was driving a ârenaissanceâ in Bitcoin adoption and that the new Ordinals products have both energized Bitcoinâs user base and clearly demonstrated the blockchainâs flexibility and superiority over its competitors. Praise like this from such an important source could truly be groundbreaking.
Events like this serve, more than anything, to prove once again that Bitcoinâs spirit is not merely posed to disrupt established industries and build a more rational order on the wreckage. Developers from around the world also have a determined ability to keep working on a project in the hard times, and this spirit has served us well on Bitcoinâs rocky road to the top. Lightning and Ordinals developers have both shown a continued ability to refine their projects despite great adversity, and that spirit has been rewarded with newfound institutional acceptance. Itâs unclear at present where exactly either of these projects will go from here or if a newer Layer-2 solution will eclipse them both as the next revolution in Bitcoin. No matter what happens, however, itâs clear that Bitcoin as a whole will be stronger for it.
Full story here:
![[DK]](/data/avatars/s/57/57999.jpg?1720990206){kind=avatar}
