Bitcoin’s Lightning ⚡ Torch is getting more expensive – Is Lightning burned down?

What began as an experiment at the end of January wandered around the world as the “Lightning Torch”. However, after about 250 transactions, this torch grew so much that it exposes difficulties of Bitcoin’s Lightning Network. What’s next?

On March 14, the Lightning Network was one year old. There was a lot going on this year: the number of nodes increased to around 7,400 and the total capacity to over 1,000 BTC. But there was a slight shadow over this birthday. The Lightning Torch, a community project, is growing steadily and is becoming increasingly difficult to share.

The Lightning Torch was launched on 19 January by a Norwegian with the pseudonym Hodlonaut. The idea was that he would send a transaction with 100,000 satoshi (about four dollars) to somebody. This should pass on this transaction and in turn sent 10,000 Satoshi. With every transaction, the value of the torch grew. However, what everyone should pay for is something that many should be able to afford: 10,000 Satoshi do not even equal $ 0.40 according to the current Bitcoin price.

The LNTrustchain or Lightning Torch has been roaming around the world for almost two months. Illustrious characters such as Samson Mow of Blockstream, Riccardo Spagni of Monero or Justin Sun participated in this torch relay. People beyond the crypto-ecosystem also joined in the experiment: Twitter CEO Jack Dorsey and LinkedIn founder Reid Hoffman kept the torch alive. From Greenland to the Antarctic, from Hawaii to Brisbane, the Lightning transaction moved around the world. Even political borders, as between Iran and Israel, were not a problem for this experiment.

Venezuela was also a stage in this torch relay. With Criptodiana the Lightning Torch came to Caracas. She sent them on to Bitbros, who are also based in Venezuela. They had to continue operating the Lightning Node with batteries thanks to a nationwide power outage. To reaffirm this sign of engagement from another side, they want to hand the torch to someone from Tesla. Tesla does not just make electric cars, but is also one of the leading manufacturers of power storage.

Lightning – If you think it’s not possible …

In addition to the power failure, however, the Bitbros face another problem: The value of the torch is now 3,930,000 Satoshi or about $ 150 – which presents problems for the current torchbearer. They were able to pass on the torch to Xavier Iturralde from Ecuador. However, the issue of the increasingly expensive torch is a Damocles sword for the community project. The problem is the lack of liquidity in the Lightning Network.

In Lightning Network you can not just receive money, you have to provide enough liquidity to pass on this money at all. Specifically, a torch bearer not only needs 10,000 satoshi to add to the value of Lightning Torch, but also nearly four million satoshi in a Lightning Network-related payment channel to participate in the community experiment. So, the bigger the torch burns, the higher the likelihood that it will come to an end: at some point, it will burn so brightly that no other channel with enough liquidity will find itself.

Difficulty with large payments

There are even more limits to the Lightning technology. Let’s say that one person has four channels open, each holding one million satoshi. One could argue that this person has enough Satoshi to pass on the Lightning Torch. The problem, however, is that the money is in different channels – and these are not easily interconvertible.

Let’s take an example: Let’s say Alice wants to pay Dave 0.05 BTC. In principle, this can go over Bob and Carol, provided in the payment channels between Alice and Bob, Bob and Carol and Carol and Dave 0.05 BTC are available.

Now Alice wants to pay Dave 0.06 BTC. Since in another connection via Erin a corresponding amount is available, that works too. Speaking in pictures, one can imagine the network like this:

Can Alice now send 0.11 BTC to Dave in one transaction? Since in the payment channels between Carol and Dave as well as Erin and Dave in total this sum comes together, that would have to go, right?

This is not possible in the existing Lightning Network. Theoretically, that would involve two transactions, but not one.

A Lightning enthusiast may say, “So what? Then we’ll pay in several payments. “So Alice would pay Dave a payment over 0.05 BTC through Carol and Dave, and in the second step over Erin one over 0.06 BTC. In principle, this is possible. For the payee, however, this carries the risk that, for example, the route via Erin can fail.

AMMS – Comes from somewhere a little light ago

With all the enthusiasm about the Lightning Network, the community event evolved into a stress test. It showed limits on the flow of payments, raising the question of how suitable the current Lightning Network is for a real payment transaction. Defense lawyers emphasize that the primary use case would be very small transactions. But the question arises where the border is to be located.

For these reasons, various projects are working on solutions to the liquidity problem. Some time ago we reported the service Bitrefill. The Swedish company is offering interested parties to open channels for them on the Lightning Network with a previously defined liquidity – against a certain amount understandably.

At the protocol level too, developers want to improve the situation. The abbreviation AMP covers Atomic Multi Path Payments. In the figure above, we have tried to illustrate the limitations of the Lightning Network that used to apply.

Atomic Multi Path Payments are now to automate the search for different paths between Alice and Dave. It will pick out the paths that have sufficient liquidity to quickly realize the desired payment. In the image above, this automation minimizes the risk for Dave of receiving an incomplete payment. If you would like to analyze the possibilities of Atomic Multipath Payments yourself, please refer to the simulation tool of Robtex.
SLP, Gitcoin, EOStorch – A torchlight train at the crypto market

The fact that the competition also becomes active in an event with great media attention is not surprising. So in the case of the Lightning Torch: Bitcoin Cash, Ethereum and EOS want to show that a Torch like the Lightning Torch is possible with them and they will perform the Torch Relay better than Bitcoin.

The SLP-Torch is a project in the Bitcoin Cash ecosystem inspired by the Lightning Torch. A token called Simple Ledger Protocol should be passed on here. Started by a person with the pseudonym Cipher Gnome, Bitcoin cash stars like Roger Ver had worn the torch for a short time. Meanwhile, however, the fire seems to have gone out; For several days the torch was not passed.

In the Ethereum ecosystem, Eric Conner launched the Gitcoin Torch. This was not simply a showcase for fast transactions or a liquidity test. Rather, the Zeil was seeking to raise money for Ethereum-based projects through the Gitcoin platform. Within just two weeks, the equivalent of $ 14,000 came together.

The EOS ecosystem claims to be the fastest torch in the crypto world. Similar to the SLP-Torch, a token is passed on to the EOS Torch. It is interesting that theoretically each transmitter of the torch can give a message.

Some of them read quite creepy:

“I have explored the inescapable magical forms of happiness.”

On at least 96 transactions it can bring the torch so far. Unlike the SLP-Torch and the Gitcoin-Torch, this seems to be still active.

Satoshi World Tour – Little Toshi goes around the world

Not enough money in a payment channel to participate in the torch relay? Then maybe another experiment is a bit more interesting: Under the hashtags #littletoshi and #SatoshiWorldTrip, enthusiasts who want to pass on a Satoshi can be found together. Unlike the Lightning Torch, which was a moose test for the liquidity of the Lightning Network, this community project is more of an example of micro-transactions.

I wish the Lightning Network all the best for its first birthday, that it can eliminate all liquidity problems and establish itself as a fast-pending payment system. And also SLP, Gitcoin and EOStorch may be conducive to the developments on the respective blockchains.