Epic short squeeze on Bitcoin begins

Education - Lightning fast bitcoin transactions

Last episode, we shared the news that El Salvador is implementing bitcoin as a legal currency, and in order to achieve this, they’ll be utilising bitcoin’s lightning network, which has lately been growing at a tremendous rate.

 

Lightning network capacity 

 

Source: https://bitcoinvisuals.com/ln-capacity

 

So, for today’s piece, let’s dive into lightning in a little more detail. 

Lightning is a “layer 2” protocol as it uses a different network to transmit bitcoin value. To achieve this, bitcoin is locked into a channel on the base chain. (Think of this similar to escrow, or leaving your car parked by the valet). These channels are assembled into a network, so that value can traverse the network with near zero cost and instant speed.  To use the valet analogy, lightning is akin to sending your valet token via messages on your phone except that any fraction of the escrowed bitcoin can be transacted. 

Not only does this bring speed and low fees, but it also increases privacy because lightning transactions only need to be revealed to the network participants involved. Furthermore, by separating bitcoin as an “asset” to bitcoin as a “network”, other use cases become achievable such as instant, cheap, global remittances that achieve final settlement faster than any other method by orders of magnitude. For example Strike uses the lightning network to achieve cheap and instant global FX remittances. 

 

Was all this too technical?  Don’t worry. Apps will make all the technicalities disappear and users won’t need to care about how it works any more than how SMTP (email) works.  Based on the surge in lightning channel capacity (see above chart), we expect many more lightning products, apps and solutions to be announced soon. 

 

Lightning is here, it’s real, and it’s awesome.

 

Want to try it for yourself?  Install Muun wallet on your phone, send me a lightning invoice to doug@stormrake.com and I’ll send you some sats!