Monday, 21 October 2019

Have you used Bitcoin's Lighting Network? If so how effective is it?

Until this week, I have performed almost all of transactions from a hosted-shared wallet at Coinbase. With most hosted wallets, including Coinbase, the user does not create or share in the private keys. In fact, most exchanges aggregate their users into a corporate wallet and use internal bookkeeping to track individual user accounts.

(Some readers feel that custodial wallets are unnecessary, risky and go aginst the whole purpose of a distributed, trustless cryptocurrency. But the assertion is not true for all users and all situations. I explain why in other Quora answers).

Yet, even though my buy/sell and wallet exchange transactions were made with Coinbase, the introduction of Lightning Network has resulted in remarkable improvements to my experience over the past few months. For example:

- In February, March and April 2018, some transactions took hours. Now they take a minute or less. (Because Coinbase aggregates blockchain reporting, there can still be a delay, but this it is still much faster).

- In February, March and April 2018, getting multiple validations or speed of a transaction cost as much as $30 in miner’s fees. Now they cost nothing or pennies.

For these reasons, in 4Q 2017 and 1Q 2018, Bitcoin gradually became useless for payments under $75. It was too costly, or not sufficiently fast or both.

With lightning network, those problems have been solved, depending upon the wallet, exchange or payment processor used by the other party.


By Ellery Davies
source: Quora
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