Lightning Bitcoin (LBTC) is a hard fork of the Bitcoin blockchain, forked at Block 499,999 by the Lightning Team. It adopts the DPoS consensus mechanism, thereby solving the problem of miner centralization and network congestion prevalent in Bitcoin. Lighting Bitcoin is an important part of the Bitcoin experiment.
LBTC adopts a DPoS (Delegated-Proof-of-Stake) consensus mechanism instead of PoW (Proof-of-Work) and has a 2 MB block size. It can increase transaction speed, promote decentralization, and supports smart contracts, thereby combining the advantages of Bitcoin and EOS, creating a valuable and functional public blockchain, and ultimately achieve the goal of becoming a value intermediary. Team believes it is a very promising project, and will prove to be a turning point in the history of blockchain development.
You may be wondering why article headline puts LBTC as “What Bitcoin Should be Really Like”. It is not due to any lack of humility. You will have a better idea once you review the history and current status of Bitcoin, explained in the following section.
It has been almost 9 years since Bitcoin was launched in 2009. Since then, cryptocurrencies and blockchain technology in general have evolved dramatically, and made a long way from being an innovative idea to entering mainstream markets and generating billions of dollars. Bitcoin has marked the beginning of a new era in storing and transmitting information and value, and has completely redefined our way of thinking not only from an economic perspective, but also from a sociological point of view, giving rise to different questions on power and control over value distribution.
It opened new possibilities for underdeveloped financial regions that were overburdened by excessively high fees charged by monopolistic money transfer operators (MTOs). MTOs such as Western Union charge as much as 39% commission in Ghana for international transfers and 24% commission in Tanzania, while in comparison, BitPesa – a cryptocurrency company from Kenya, charges only 3%. Bitcoin created a new way to protect privacy, and a way to avoid government over constraints, fostering new financial independence. In Venezuela for example, US-imposed sanctions made it difficult to conduct international money transfers, and the improper implementation of domestic policies has led to a serious currency devaluation, therefore forcing many tech-savvy consumers to turn to Bitcoin.
Since the time Bitcoin was created, thousands of blockchain projects have emerged, each solving different problems and catering different markets. In future, blockchain technology will be used extensively in fields such as finance, ownership management, investment management, Internet of Things, supply chain, and so on. Despite the rapid technological development, the whole industry is still in its early stage, because it has only begun to attract worldwide attention recently. Therefore, constant rethinking and upgrade is crucial for further technological expansion and improvement.
Bitcoin has been highly successful in entering the mainstream market, due to which global interest in crypto-technologies has increased manifold. However, it also faces several significant problems. Increasing centralization due to processing power concentrated in the hands of large mining pools, and cost problem brought by energy consumption, are undermining the original idea of a small casual transactions supported, one-CPU-one-vote, decentralized payment system proposed by Satoshi Nakamoto. Moreover, the conflict of interest has created huge differences between the mining pools and the core team that ultimately decides the project’s direction, raising questions on the viability of Bitcoin itself.
The technology is so promising and has such great potential, that it keeps bringing thousands of new users and organizations into its network every month, pushing Bitcoin’s price from US$3,000 up to US$17,000 in just three months. This rapid price increase, along with very limited processing capabilities, have vastly increased transaction costs and validation speed.
The Bitcoin protocol implements a 1 MB block size, due to which only 7 transactions can be verified per second, and there is very limited throughput. This has led to transaction costs soaring over US$20, far exceeding the average transaction size. In comparison, the Visa network processes 4,000 transactions per second (tps), while PayPal processes 115 tps. This has made it impractical to use and trade Bitcoin on a daily basis, and has hindered its mainstream adoption as an effective payment system, limiting its development to a speculative tool or investment instrument.
On the whole, the high volatility of Bitcoin’s price along with the abovementioned issues has led to the conclusion that Bitcoin still needs several steps to be an establishment-free, global, inexpensive value exchange system, which would bring a higher degree of freedom and transparency, including in regions that are now excluded from the global economic system, ultimately shifting the power to individuals.
Therefore, there is an urgent need to find a solution for the problems of network congestion, miner centralization and high transaction costs. In fact several attempts have been already made to solve these problems, which have ended up in hard forks. There are a handful of new chains that were forked from the original Bitcoin chain, each solving a particular problem of the original system.
The developers of Bitcoin Cash (BCH) were the first to do so, as they expanded the block size to 8 MB and introduced a new Difficulty Adjustment Algorithm (DAA). Increasing the block size does improve scalability, but is it a definite solution, or are we just postponing the problem? Moreover, the issue of centralization still remains.
Bitcoin Gold (BTG) came up with a different solution, and implemented a new mining algorithm – Equihash, limiting mining hardware to GPUs, thereby reducing the entry threshold. But the result is the same, limiting mining hardware to GPUs cannot solve the network congestion and centralization problem. Overall, earlier forks are still based on the Proof-of-Work consensus algorithm, which is energy consuming, and was later improved upon by new, more progressive consensus algorithms such as Proof-of-Stake and DPoS. These adjustments by the earlier forks are just temporary fixes, rather than sustainable solutions.
Similarities and differences between the forks
The new hard fork of Bitcoin blockchain – Lightning Bitcoin (LBTC) adopts the DPoS (Delegated Proof-of-Stake) consensus mechanism, created by Daniel Larimer, the serial entrepreneur behind BitShares and EOS. The DPoS mechanism has proven to be robust, secure, and efficient after being reliably used in multiple blockchains. It eliminates the negative impact of centralization in the PoW algorithm, ensures maximization of stakeholder profitability and the network effect, and minimizes the cost of maintaining the network.
We do not know whether today’s Bitcoin is the way Satoshi imagined, but the Lightning Bitcoin does seem to be the best choice to reinstate the rights of holders. Comparing with other projects that tokens were distributed through ICOs, which token allocation are mostly centralized in hands of a few people, LBTC is much more decentralized and keep in line with Satoshi’s initial idea because Bitcoin holders can claim LBTC in 1:1 ratio to BTC held at block 499,999.
The DPoS consensus mechanism enables each person holding an LBTC token to vote and decide who will be the authorized nodes for the entire system. At most, 101 delegates who have received the most votes, will have the right to forge blocks and record the transactions. Users who hold LBTC can vote at any time to replace the authorized nodes. If there is instability in the forging process, the computer crashes, or a delegate tries to misuse his/her authority, then they will be voted out and backup nodes can replace them immediately. In one way, DPoS has a parliamentary system like that of the United States, except that instead of having elections every four years, elections are always going on.
Moreover, it brings the possibility to dynamically adjust system parameters like transaction fees, block size and intervals, throughout the lifespan of the system via voting for delegates, thus avoiding forking and market segregation. A delegate is a special type of account that has the privilege to propose changes to the system. This may bring the question of centralization by simply shifting the power from the hands of miners into the hands of delegates. However, the DPoS protocol resolves this by giving stakeholders the rights to not only elect and reelect delegates, but to also approve their proposals. According to Dan Larimer, “This design was chosen to ensure that delegates technically have no direct power and that all changes to the network parameters are ultimately approved by the stakeholders.”
Delegated Proof-of-Stake has tremendous advantages, such as a tps comparable to Visa – 1,000 to 10,000, 3s block interval (Bitcoin – 10 min), average verification speed of 1s, and a 2 MB block size, which can be adjusted in the future through voting. This enables unlimited scalability and stability of the system, possibility of everyday use, and makes Lightning Bitcoin a solid alternative to existing financial systems.
The snapshot of the blockchain was taken on December 18th and the main network was launched on February 5th. From then on, the project has gained substantial traction during this time, especially after the announcement about the cooperation with Stan Larimer, the godfather of BitShares, which resulted in a stunning 100% price increase in one day, and partnerships with exchanges and wallets have been establishing.
The Lightning Bitcoin team have members from the Ripple and Metaverse projects, the current code is open source, and transactions and forgings are running smoothly. The Lightning Bitcoin team has strong technical capabilities, and is also working hard to build a community like Bitcoin. The team has a lot of belief and trust on the project’s success, and have already achieved a lot. At present, the community have done several things, such as developed the new light wallet, created all kinds of tutorial, and developed forging pools in many countries. As for the official development plan, more talents will be invited to join the team and a DPoS lab, which will be established in the United States. The lab will focus on the underlying technology and develop it further.
LBTC will also implement smart contracts to eliminate the need for third parties to secure standard contracts, mitigates risk, which comes with the necessity to trust blindly, and generally increases transaction speed and reduces cost. With smart contracts Lightning Bitcoin will enable users to create and distribute their own assets and create projects based on LBTC, making it a blockchain platform with much greater capabilities than the original Bitcoin. It will also support DApp development and cross-chain atomic swaps, adding even more usability and enhancing system infrastructure.
Once realized, LBTC will not only have the function of payment, but also build its own ecosystem, and increase Lightning Bitcoin circulation. In general, Lightning Bitcoin will make an attempt to merge the best of Bitcoin and EOS, breaking the boundaries of cryptocurrency, and broadening the horizon of its real-life applications.
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