At Blockchain, we are spending a lot of time thinking about how to scale not just our own services, but how to scale the bitcoin network so it can support tens of millions of new users.
Mats Jerratsch joined Blockchain to drive our research and development of layer 2.0 bitcoin technologies – think payment channels and other exciting new technology.
You might know him as the developer behind the Thunder Project, a proposed implementation for bitcoin payment channels based on the lightning.network. It’s exciting to have him on the team, thinking about the distant future, and keeping us focused on the horizon.
With that said, Mats took some time to write some cliff notes on his current work on the Thunder and Lightning Network – let’s start with the basics!**What is the ThunderNetwork? **
The ThunderNetwork is a way to send money “off-chain” to other parties in a trustless manner based on the lightning.network. The lightning.network is a P2P network between thousands of nodes that builds payment channels. Using 10 random nodes at a time, these payment channels create a large network-like mesh.
A payment channel is a way to send bitcoin in a trustless way to another party without touching the main block chain. In its most basic form, payments are made by sending a transaction from a multi-sig address to another party. Additional payments can be made by sending transactions with increased amounts. These payments are final and instant, and the other party can broadcast them at any point in order to release the funds and to close the payment channel.
The thunder.network is open source and everyone is invited to collaborate and learn more here: https://github.com/matsjj/thundernetwork
**Thunder & Lightning Network Hurdles: **
Security Features – To ensure payment security, additional bitcoin features are needed. Many of these are currently being worked on, such as the current voting pipeline (OP_CLTV).
Transaction Malleability – It’s also critical we end transaction malleability. Some proposals exist, but nothing is conclusive.
Timing – A preliminary version that only depends on CLTV can be deployed within a few months, but it is not ideal because the fixed channel lifetimes have to be redone from time to time. We expect OP_CSV to be active around Q3 2016 and Segregated Witness or a similar suggestion to resolve lingering issues.
Why are Payment Channels Important?
Payment channels on the bitcoin network are at this point, highly experimental, and somewhat theoretical until many of the challenges above can be addressed. However, it’s important to start working on these as channels, or similar technology offers potential to:
- Build secure, trustless and nearly instant payments
- Unleash the power of microtransactions and allow the network to handle heavy loads
- Potentially increase privacy functionality
Follow our progress on Twitter – @blockchain