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Did you know? The Lightning and Bitcoin addresses are not compatible.
This means that a user can not send money from his lightning address directly to a recipient's bitcoin address, or vice versa, without going through a further step to transfer his lightning funds into his own bitcoin account.
It seems counterintuitive, especially since the layer-two technology for off-line transaction is touted as a way to revolutionize the scaled protocol – more users and more transactions. Yet, there is this incompatibility between the new off-chain lightning transactions and the old-school bitcoin transactions.
A developer, however, worked on a possible solution, and was inspired by an interoperability technology that is slowly gaining steam: atomic swaps.
The developer of Lightning Labs, Alex Bosworth, was examining atomic swaps, a technology that allows the native cryptocurrency of a blockchain to be exchanged with another without intermediaries when it hits it to be used to exchange lightning for bitcoins in the chain old style.
Called "submarine swaps", the technology is now tested on the live lightning network.
Although, trying it could actually be dangerous. Also very similar to transactions on the still nascent lightning network, Bosworth admitted when he announced the launch of the project's mainnet that the use of submarine swaps at this stage is a risky venture.
"There's still a lot to build, but it's more fun to try on mainnet," he tweeted, using the "reckless" hashtag, which has become a draw for developers who use experimental technology with real money.
For his work, Bosworth has created a connection between the bitcoin blockchain and the lightning network with technology. Currently, the technology only supports funds sent by a blockchain to the lightning network, and not the other way around.
But exchanging lightning network payments for chain coins should be possible even one day.
And, far beyond, Bosworth imagines a future in which every bitcoin or cryptocurrency wallet supports technology one day and, as such, it would be equally easy to send litecoin, dogecoin or any currency to a flash address.
An ethereal test
Meanwhile, this multi-currency world Bosworth is itching because it has already been tested.
Jason Wong, an aviation software developer also interested in cryptocurrency, started playing with submarine swaps not long ago, starting by showing something with a price on the lightning network that can be purchased using litecoin.
"The same chain exchange is good but the cross-chain exchange is even better", as Wong has included in a recent blog post.
But Wong told CoinDesk he wanted to go even further.
"It will reach … more users if the submarine can support ethereum," he said.
Thus, a couple of weeks ago he implemented another version of the technology, allowing to purchase lightning-priced articles with ether, the native cryptocurrency of the etheum blockchain, the second largest by market capitalization. And with Bosworth's help, Wong showed that trade can be done.
Serious exchange
While the technology is new, there are also cases of serious use.
One is "filling up" lightning channels, which will most likely be a common necessity.
This is because a complicated thing of lightning is that users need to set up channels with a certain amount of money in them. This process of creating a channel costs on-chain transaction costs, and those are known to increase when more people use cryptocurrency.
Let's say you open a lightning channel for $ 20 dollars in bitcoins. But then quickly use those funds that deal with others.
Instead of opening a completely new channel – and incurring higher transaction fees – a slightly cheaper route would be to top up the existing channel using an undersea swap to exchange funds in the chain for extra off-chain funds.
In sites like Satoshis.place, made exclusively for lightning payments, with submarine swaps, users could potentially pay in any currency, both in bitcoin chain, ethereum, litecoin and many others.
Perhaps, however, one of the most interesting uses for submarine trade is the crypto-cryptographic exchange. While atomic swaps are usually seen as the main technology working to achieve this goal (allowing users to transfer bitcoins to litecoin or dogecoin to ethereum), in some ways submarine swaps could do even better work.
This is because, to make an atomic exchange, it is necessary to enable lightning on both cryptocurrencies and, at the moment, only a handful of cryptocurrencies has a functioning lightning network.
But with submarine swaps, only part of the trade needs lightning.
This type of exchange therefore, according to Bosworth, requires less work by developers who want to support a variety of different currencies, without having to go through the long process of integrating each of them individually.
Speaking from the developer's point of view, Bosworth told CoinDesk:
"I want to support your choice of spending coins, but I do not want to add support for many different currencies."
& # 39; Utopian swap future & # 39;
Bosworth's ambitions for swaps go beyond these uses, though.
In a conference that described his vision for technology a couple of months ago, Bosworth went so far as to imagine a "future of utopian exchange", highlighting a variety of types of exchange.
Beyond submarine trade, for example, HTLCswaps could allow users to seamlessly exchange lightning payments for data.
However, there is still a long way to go before the future comes true, even if it is specifically about submarine swaps. For example, "many challenges" were discovered through the Bosworth tests.
"My concept was that exchanges could be something very cheap to provide, like what a cell phone could do," he said, noting that a problem with that particular idea is that submarine swaps are more difficult to do when a blockchain is seeing higher transaction volume.
Since the bitcoin testnet is currently being exploited for transactional spam, clogging the network, Bosworth discovered it the hard way when he was experimenting with the technology there.
Still, he did not stop his search. In contrast, the short-term goal of Bosworth is to find a way to analyze this spam efficiently, in the hope of ensuring that smartphones can always handle a submarine exchange.
Internal submarine image through Shutterstock
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