22: Lightning & Liquid
To begin, here is (another) masterful resource list from Jameson Lopp.
We’ve briefly touched on the fact that the Lightning Network addresses the “scalability” aspect of the Blockchain Trilemma.
How about a little bit more (thanks to their website):
“Instant Payments. Lightning-fast blockchain payments without worrying about block confirmation times. Security is enforced by blockchain smart-contracts without creating a on-blockchain transaction for individual payments. Payment speed measured in milliseconds to seconds.
Scalability. Capable of millions to billions of transactions per second across the network. Capacity blows away legacy payment rails by many orders of magnitude. Attaching payment per action/click is now possible without custodians.
Low Cost. By transacting and settling off-blockchain, the Lightning Network allows for exceptionally low fees, which allows for emerging use cases such as instant micropayments.
Cross Blockchains. Cross-chain atomic swaps can occur off-chain instantly with heterogeneous blockchain consensus rules. So long as the chains can support the same cryptographic hash function, it is possible to make transactions across blockchains without trust in 3rd party custodians.”
Now you might wonder how does one interact with our build on the lightning network? The answer is that there are lots of implementations so far and thanks to groups like Lightning Labs and others. Here’s 2 directories: (1) and (2).
One that might resonate is Strike which facilitates cross-border transactions virtually instantly and for free. Here’s their CEO Jack Maller’s presentation to the IMF.
Created 4 years after the Lightning Network, the Liquid Network, created by Adam’s Back’s Blockstream in 2020 essentially does what the Lightning Network does except for medium to large transactions (as opposed to small to medium transactions). Below is a good visual; I also recommend reading this article.
