As a former Wall Street analyst, I've always tried to find out more about any company I've been assigned to. Hours of research have gone into this effort. But in the end the question has become: what is the bottom line?
Today there are dozens of crypt analysts but trying to get an answer on what the bottom line is when it comes to The Lightning Network is another matter. Brilliant and well-traveled experts claim both incredible growth and acceptance, while others insist that TLN is a complete failure.
Here is my conclusion: The Lightning Network is a huge step forward for Bitcoin that will eventually contribute to any level of mass adoption ends up taking place. This is because its purpose is to facilitate small peer to peer transactions that account for the vast majority of daily financial transactions.
TLN probably sacrifices a certain amount of security … but, so what? No sane hackers would waste their time scribbling $ 5 and $ 6 transactions when theirs is a much bigger fish to fry in the vault of the crypto trade. So security is not the most critical problem here.
After less than six months of activity, supporters and opponents of TLN are engaged in a stupid game. If we could only examine their cryptographic properties, I suspect we would have a clear picture of their bias. But unless they choose to disclose their holdings, we'll never know.
In order to progress towards mass consumption, cryptographic networks have to process transactions almost instantaneously. As of August 1st, the average confirmation time for Bitcoin was 23 minutes. This simply will not promote mass adoption.
TLN is the technology touted as a solution to the problem of Bitcoin scalability. Introduced in March of this year, almost everyone is impressed by its growth. And almost everyone agrees that the way to measure growth is to have a partial total of the number of nodes.
Rompert.com counts 2014 nodes in the total TLN network compared to 29 when it was opened. With a certain technique, they determined the network's capacity to over $ 153,000. This is not a huge number by any means, but after all, TLN is still a child learning to walk.
The ridiculously negative case
Recently we found a title that claimed 99% chance of failure of TLN on transactions above $ 200 and only ridiculously small transactions of less than five cents are completely successful. If this were true, the next observation makes absolutely no sense.
It is stated that since TLN was launched in March, today's transaction prices are now $ 1.06, falling from $ 55 to the December peak. Meanwhile, the transaction volumes on the network are nine times higher.
Someone here is confused and I think it must be me. Who, sane, would pay a fee of $ 1.06 to make transactions worth less than a nickel encryption value?
The Ridiculously Bias Positive Case
Completely in contradiction with the aforementioned expert is a quote from Bitcoin developer and the so-called TLN longtime critic, Peter Todd. Mountains of praise are now amassed on TLN after Todd has made payments of $ 3, $ 5 and $ 40 in almost instant. Even if we are not offered any evidence that such transactions have ever occurred, at least we know where Peter comes from.
The Bottom Line
Lightning Network promises to enable millions of transactions per second using a Bitcoin blockchain peer-to-peer network. This is the fastest financial transaction network in the world, even if compared to competing blockchain technologies, like the 15 tps of Ethereum, the 1500 t of Ripple or the new EOS launched with a maximum of 8000 tps.
But the moniker, the fastest network of financial transactions in the world, is just a fleeting notion. The Bitcoin Cash network now claims a new one-day transaction record of 484 per second. Is it a valid number? Since the event has just occurred on the first anniversary of the launch of the network, we suspect this is a claim for compensation: time will provide the truth.
There are all sorts of ways to measure the progress of TLN and we are in the time when there is enough data to prove that the earth is flat. For me, the most important barometer in the short term is the growth of knots. This is the most true measure of market acceptance. And the growth of TLN confirms that it is going in the right direction towards mass acceptance.
Titles on TLN move the prices of Bitcoins so armed with this information to improve their investment capabilities, no matter if you are a long-term trader or investor. Much of the noise can be placed in the short-term imperfections category or simply a liar poker game.
Featured image courtesy of Shutterstock.