Is this absolutely fantastic for Bitcoin?
When I was writing a research paper, it came to my attention that I needed to update my data post Segwit, and the lack of understanding of Lightning became more apparent over an open discussion:
Lightning @ 22:37 minutes
So I decided to write a brief discussing these matters.
First, let’s discuss transactions per block, pre and post Segwit.
BTC is set to a 1 MB block (1,000,000 bytes) or 2¹⁰; of this 550,000 bytes are comprised of header. Average byte per transaction pre-segwit was 225, thus:
- 450,000 bytes / 225 = 2,000 Transactions / block.
This is a commonly quoted reference number some may recognize. Now, let us add the updated weight per block and see what that does:
- 3,450,000 / 450,000 = 7.7x increase in transaction space
Lastly, Segwit transactions are closer to 170 bytes vs 225 bytes, so algebra says:
- 3,450,000 / 170 = 20,250 transactions per block.
Concluding we have increased *standardized* max capacity from 2,000 transactions to up to a theoretical max of 20,000, or ten fold.
Now on to Lightning, and better understanding Bitcoin.
Bitcoin can (and virtually since forever) process Smart Contracts. An example of this is a multi-signature wallet, which is an example of a Smart Contract; however, compared to Ethereum, Bitcoin is programatically inefficient.
This means that it is quite expensive to utilize the Bitcoin Smart Contract features — whereas Ethereum might allow 1,000 lines of code modifications for a small fee, Bitcoin allows only 1 line. Thus, adding in 1,000 lines of code increases fees 1,000x, vs a few pennies on Ethereum.
Aside, the intention behind this is to steer Bitcoin toward retain its core properties of node distribution and value transfer, not to serve as an ultra expensive Github or Wikipedia. Today, there are far, far more nodes run by Bitcoin users than Ethereum users, and a Bitcoin node requires $100 of hardware compared to an Ethereum node necessitating $1,000, for similar performance (note: it is common propaganda amongst Ethereum pumpers to declare full archival transaction indexed nodes an unnecessary luxury for the modern man, but it is the opinion of this author that such statements are designed to confuse rather than educate the common audience).
Lightning, however, better incorporates Smart Contract functionality into the Bitcoin blockchain.
The Lightning network is a series of single-purpose Smart Contracts with one purpose only: to track value transference, initiated and settled over the Bitcoin blockchain.
Again, as with Bitcoin, the intent is not to store the Encyclopedia, but to track value. This is highly important, as it makes the code storage requirement still very minimal and relatively easy to process — but it enables one key feature, which is Smart Contracts executed efficiently via Bitcoin; but there is more to it than that, and that is where interoperability comes in, generically referenced as ‘atomic swaps’.
Ignoring the buzz, this is simply two Smart Contract platforms sharing a common interaction. A base example could be the Ethereum database interacting with the Neo database, so that someone transfers 10 OMG tokens to a new ETH address, while simultaneously transfering 1 NEO token to a new NEO address — for each to occur simultaneously, or put more precisely for finality to be reached only after the occurrence of each, or the disoccurance of one to prevent the finality of either (or to issue an unstoppable automatic reversal).
Now, what you have with Bitcoin is the possibility of it interacting with the Lightning network, which could in turn interact with a variety of other blockchain databases.
This could pave the way for ICOs and other similar creations to fully utilize the Bitcoin network for transferances of value (similar to Ethereum) or for Bitcoin to interact with all other blockchains in a like-minded fashion; some could refer to this as the Bitcoin Exchange or perhaps more poetically ‘the rainbow road’.
Aside, it is important to note that unlike Ethereum, each token or alternative blockchain would need to maintain its own databases or sources of ‘decentralized distributed data’. Whereas Ethereum houses millions of kittens, the Bitcoin borders are rather closed; preserving a consistent level of quality.
Lastly, regarding cost, the fee to run a complex Ethereum transaction can be 100x more than the cost of processing a standard movement of Ethereum. However, the cost for processing a Lightning transaction is a small fraction of the cost of processing a Bitcoin transaction, and any interoperable blockchains would set a fee relative to itself.
So while Ethereum kittens are housed at the same cost of storage as that of its credit card substitute, Bitcoin transaction always maintain priority; and theoretically all Lightning contracts could be batched into 1 transaction per block; and all interoperable data batched within Lightning.
So, in the post-Segwit world of Bitcoin you have 10x the available space for Bitcoin transactions and Lightning interoperability, creating a more colorful and expansive world for interactivity, without fostering a technological addiction with prolonged and continued use; with Bitcoin, Lightning, and interoperability the Bitcoin blockchain is strained by 1 transaction per block, or 9 MBs per year, while providing comparable functionality to that of modern Smart Contract platforms.
Some could argue more reliably, others could argue more cumbersome, but I will leave that for the reader to decide.
Hope you have enjoyed this exploration into the Bitcoin blockchain. To participate in our Thursday discussions, email email@example.com. Our prime group meets at 8pm EST, however if sufficient quantities of Europeans, Pacificans, or Asians express interest than we will add more time slots; each meeting is limited to exactly 8 people, with a representative elective system designed to scale as we grow bigger. For more information, partake 🙂