The US Federal Reserve would be lying to us if one day it said it doesn’t care about Bitcoin (BTC). The test, published a working document on the Lightning Network and the possibilities of exchange that it authorizes with bitcoin. To say that the famous report gives some advantages over other traditional payment methods such as Visa and MasterCard.
Lightning Network, transforming bitcoin into fiat
the rapport of the Cleveland FED regarding its study on ” Lightning Network: turn Bitcoin into money enthusiasts are not surprised. True, it was held in an earlier period, from 1it is January 2017 to September 5, 2019, but praised LN for improving the efficiency of bitcoin.
This is the comment of this banking institution:
« We found a significant association between LN adoption and blockchain congestion reduction, suggesting that LN has helped improve the efficiency of bitcoin as a means of payment. This improvement cannot be explained by other factors, such as changes in demand or the adoption of SegWit. »
This detail of the US Federal Reserve extensively described the characteristics of the Lightning Network in its report. He did not omit to provide explanations on how the multiple transactions carried out on this platform are carried out. In general, the LN is based on a side chain that integrates two very different stages:
- the opening of smart contract ;
- and the liquidation or closing of the balance.
The LN works the same way as credit cards, except bitcoin transactions are recorded on the blockchain. For CBs, it’s a completely different story.
Lightning Network and bitcoin (BTC), the future prospects?
The Cleveland Fed doesn’t believe the LN is a ” panacea for bitcoin. But the fact that this network saves energy is a considerable advantage.
« Second, since fewer transactions need to be recorded on the blockchain, it takes less memory and power to run a bitcoin node.…Third, by lowering fees, the LN reduces the incentive for Bitcoin miners to use large amounts of computing power, which means less energy consumption and positive consequences for the environment. »
Anantha Divakaruni and Peter Zimmerman, researchers at Cleveland Bank, believe the Lightning Network will help bitcoin develop and function better as a means of payment ».
At the moment, we cannot afford to say that Bitcoin will be able to compete with MasterCard and Visa. 7 transactions per second is a bit far from the 1,700 transactions that Visa can process during the same period. Except that the LN could enhance this capacity, and increase the figures up to 1,000,000 transactions per second.
In short, hand in hand, the Lightning Network and bitcoin want to put aside centralization and bring a new alternative to traditional solutions to our world. However, some accuse the LN of being a substitute for decentralization, without denying its positive impacts. The response from the Cleveland Fed is clear: the centralization of the network does not have a clear effect on the efficiency of the network. »
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The blockchain and cryptocurrency revolution is underway! And the day the impacts are felt in the most vulnerable economy in this world, against all hope, I will say that I had something to do with it.