One of the key technical challenges for Bitcoin is the issue of congestion within the blockchain that drives the entire digital currency. Slowing transactions and confirmations as a result, it is an issue that much of the cryptocurrency industry is looking at, with several proposed solutions under development. One of those, from Blockstream, is the Lightening Network, that takes the approach of separating transactions away from the main blockchain. They recently announced the first successful micro transaction using the system, and this could be a significant moment in the ongoing development of the digital currency.
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Developers at Blockstream, the blockchain startup, have just announced that they have completed a successful micropayment test on their Lightening Network using Bitcoin testnet coins. The Network, a hybrid system that works in tandem with, but outside, the Bitcoin blockchain, promises faster transactions by separating those transactions from the main chain.
The test was carried out by using an ASCII cat image as the product for purchase. The buyer opened what they refer to as a channel with the product, in this case the cat image, and sent the required funds. The test was just a single hop, but in the future the lightening network will allow vendors to leverage other stable nodes to quickly relay payments and further reduce transaction congestion.
Confirmation of a successful transaction is transmitted via the Lightening Network itself, although in a commercial situation the vendor would usually also send an email confirmation as well. While the system as designed would seem to work well with deliverable products and offer an interesting solution for commercial e-commerce sites, it is thought that initial adoption will be for improved financial transactions. Exchanges and other currency trades could certainly benefit from the speed, and it may even provide arbitrage opportunities for Bitcoin traders once widely adopted.
This successful test comes just after an announcement that Lightening developers will soon begin the creation of code libraries that will enable the creation of store frameworks built upon lightening payment structures.
The success here is not just good news for Blockstream, who are competing against other alternative proposals to streamline Bitcoin transactions, but Bitcoin itself. Congestion in the blockchain remains Bitcoins biggest technological challenge, and as the number of transactions increases, so does that issue. With the blockchain currently around 100 Gigabytes in size, a solution that helps reduce that and transfer data away from it can only be beneficial to all users.
If Bitcoin is to expand as the industry wants it to, with more users and more transactions, the Lightening Network initiative could be crucial to that success in the future.