Photo: Coinspeaker
Lightning Labs has announced the alpha launch of a new feature that will improve the process of sending and receiving Bitcoin on the second layer of Lightning Network. Called โLightning Loopโ, the feature will enable users to receive Bitcoin in increasing quantities without having to close and reopen new payment channels.
Announcing the alpha release of Lightning Loop, a non-custodial service that makes it easier to receive #bitcoin on Lightning.
With Loop, users can get inbound capacity and withdraw from Lightning while keeping channels open. ๐
Read more and try it out: https://t.co/KoAXDm9JFl
โ Lightning Labsโก๏ธ (@lightning) March 20, 2019
The process of creating a channel on the Lightning Network is similar to conducting a usual transaction over the Bitcoin network. Opening a payment channel requires users to pay the same fees and wait the same amount of time as sending a regular Bitcoin transaction the blockchain.
However, further transactions made with the payment channel have much lower costs. The difficulty was in the networkโs usability. Until now, when a userโs channel reached maximum capacity, it could accept no more payments, which made it inconvenient for businesses.
With Lightning Loop, it will be all different. It will be easier to receive funds on Lightning Network, as users will be able to securely move funds in and out of the Lightning Network using non-custodial Bitcoin contracts. As the developers stated, with Loop, users, businesses, and routing node operators can keep Lightning channels open indefinitely, making the network more efficient, more stable, and cheaper to use.
In a blog post, Lighting Labs developers Alex Bosworth and Bryan Vu stated:
โThis initial release focuses on on the ability for people to receive with what we call Loop Out. Lightning Loop Out allows users to increase their receiving capacity by offloading their funds from the network while keeping channels open.โ
They added:
โThe lightning loop will specifically allow funds to be moved outside of the payment channel and into a bitcoin wallet, cold storage, or fiat currency via an exchange. This emptying of the channel allows users to receive more payments, while still continuing transactions and looping out again. As a result, new recipients on the network no longer need to rely on others to open channels with them, before theyโre able to start receiving payments.โ
Further, Alex Bosworth and Bryan Wu compared Lightning channels with money tubes:
โLightning channels are like tubes of money: the more you send the more you can receive, and the other way around. Money moves around in the tube, but the total amount of funds remains constant. So, unlike other payment systems, Lightning requires โinbound capacityโ in order to receive funds. โ
With Lightning Loop, the efficiency, scalability, and usability of Lightning are expected to improve immediately.
Lightning Upgrades: Loop Out And Loop In
As the developers pointed out, Lightning Loop is only the first step of the two upgrades expected to be implemented. Lightning Loop belongs to Loop Out โ the feature that increases usersโ receiving capacity by offloading their funds from the network while keeping channels open.
The second feature expected to be released is called Loop In. It will allow making payments to Lightning Channels from exchanges and other on-chain sources. As a user makes a series of purchases via Lightning, the channel balance decreases.
Loop In will refill these funds on Lightning from a regular on-chain bitcoin wallet or via an exchange account, and continue to add additional funds, which means that users can stay connected to their payment channels, even after they have depleted the entire balance of all their open payment channels through spending.
This year is likely to become fateful for Lightning Network, as the developers are building great plans. Some big events have already taken place. The recent Lightning Torch experiment that attracted over 140 participants from over 37 countries has sparked interest from such figures as Twitter CEO Jack Dorsey and Binance CEO Changpeng Zhao.
Moreover, the latter proposed Elon Musk to take keep the fire going for Lightning Torch. Such attention from outstanding players is definitely a good sign, thatโs why crypto fans have a subject of rejoicing.
