The Lightning Network brought to Bitcoin with Segwit enables users to instantly exchange Bitcoin for Litecoin and vice versa. The first ever transaction between the two coins has now happened.
Segwit (short for Segregated Witness) brought with it many new exciting features for Bitcoin when it was implemented in August this year, not least of them atomic swaps and the Lightning Network. The Lightning Network is an off chain network, that can, among other things, help reduce the load on the main Bitcoin blockchain.
Billions of transactions can theoretically be made instantly through the application of smart contracts. Transfers are made with other parties with a 10-day lock-in period, allowing the exchange to either occur between the two parties or have them cancel and be refunded. The first swap can be seen taking place on the YouTube video below. it was released yesterday by Lightning Labs who devised the code.
SegWit and Its Progress
Are there downsides to any of this? Not really unless you are a miner, no. Bitcoin miners will not be making as much profit from receiving transaction costs, as there stands to be less of them made. Whether this will prove to be a decent combat to the increasingly centralized nature of the current state of Bitcoin mining remains to be seen, as large corporate controlled operations rather than a collective of truly decentralized users, hold a vast, potential unfair sway over the Bitcoin network.
Marshaling the approval of pool owners and mining operators has been key, however, to bringing the power of SegWit to both Litecoin and Bitcoin, as combined hashing power was needed in order to activate the SegWit changes on the entire blockchain.
Litecoin’s SegWit implementation came first, ahead of Bitcoin, not by design, as infighting prevented agreement for the change happening sooner for Bitcoin. This ultimately meant that Litecoin was able to act as a testbed for both the implementation of SegWit itself and also actually running the Lightning Network code which was originally written for Bitcoin by Lightning Labs but could be implemented on Litecoin as the coin is essentially a fork of Bitcoin.
Litecoin And Bitcoin Highways
Litecoin creator Charlie Lee wrote:
Think of it being two highways: Today, Bitcoin is packed full of cars and Litecoin is empty. Even with Bitcoin packed, the cars are not coming to use the Litecoin highway today because it’s not connected and it’s inconvenient (centralized exchanges and slow on-chain transfers) to go across. LN will build bridges over the highways.
The potential benefits of the two coins working together is well summed up with Charlie Lee’s highway metaphor, users need speed and the Lightning Network would appear to more than deliver on that front while also easing congestion on the blockchain.
The news brought an increase in Litecoin’s price as well, as it rose from $63 to $72 in 3 hours, happening during Bitcoins bull run in the last 24 hours to $8k.
Are you exciting for the upcoming months? Will this help retail adoption of Bitcoin payments with its speed of use? Let us know what you think in the comments below.
Images courtesy of the Bitcoinist archives, BigStockPhoto