For some cryptocurrency enthusiasts, one of the most promising aspects of the digital currency space is the Lightning Network. Conceived as a separate network which adjoins to the existing bitcoin network, Lightning could allow for user-to-user transactions which would not suffer from extended processing times or high transaction fees. Because Lightning Network payments would be made on an individual basis, the thinking goes, they could perhaps be dealt with separately from the general bitcoin blockchain, thereby freeing them from the slowdowns associated with typical transactions.
Charlie Lee, the outspoken founder of litecoin, believes that his digital currency could be instrumental in facilitating the Lightning Network as it develops. He re-echoed his enthusiasm just last week.
Litecoin the “Easiest Onramp”
In a tweet from July 11, Lee suggested that litecoin “will also be the easiest onramp onto the Lightning Network. BTC takes too long and fees [too] high? No problem. Open an LTC payment channel on chain cheaply and quickly, then atomically swap for BTC if/when you need to. This can be done in one step.”
Lightning Labs, a developer behind the Network, has a beta feature in its network in which two cryptocurrencies could be selected, although this feature is not yet on the live mainnet, according to Crypto Vest. Litecoin, for its part, has its own independent Lightning Network which has tested atomic swaps, although there remains some fine-tuning to do before this procedure can be readily incorporated.
As of now, litecoin is one of the go-to digital assets when it comes to on-chain transactions that are both fast and cheap. However, the bitcoin network, once plagued by congestion, has managed to overcome many of those issues. It now runs on relatively low fees and has even become the preferred network for the transmission of large transactions. Because of the way that the Lightning Network processes transactions, some in the crypto community feel that large transactions are too risky for the new network.
The Lightning Network, in development for several years, was launched in March of this year. Many felt that the launch was rough, as traffic problems were widespread and some users experienced losses. Even several months in, the Lightning Network has not seen its capacity increase as many hoped for.
Investing in cryptocurrencies and Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or ICOs. Since each individual’s situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns bitcoin and ripple.