As the Lightning Network matures into an accessible format for all cryptocurrency traders, it has the potential to propel the adoption and valuation of Bitcoin to previously unmatched levels.
The Lightning Network
The Lightning technology works by essentially adding a layer onto existing blockchains, creating a multitude of private payment channels outside of the chain. For Bitcoin, this has the potential to solve the issue of scaling that has been problematic in terms of expanding adoption.
Developers and founders of the Lightning Network have said that they expect the technology to process thousands of Bitcoin transactions per second, instead of about seven. They also suggest that it could reduce fees to less than a penny while reducing confirmation times from 10 minutes to potentially almost instant.
Lightning Labs is one of three startups involved in the bulk of research and development into Lightning, working alongside Blockchain and ACINQ. They have agreed to cooperate in developing the network to a single, open standard with no centralized ownership. This may well encourage other developers to also contribute to the project, or build on top of it.
Justifying Bitcoin price predictions
The Lightning Network still has a long development journey ahead, but the numerous applications that it holds may well be valued in the billions of dollars. It has the potential to be a catalyst for a significant number of cryptocurrency innovations.
It is this multifaceted potential of the Lightning Network that has lead pundits such as Tom Lee to predict Bitcoin’s price to rise to USD 25,000 by the end of the year.
John Pfeffer, a major institutional investor, has predicted that Bitcoin will come to replace gold, while eventually being worth USD 700,000.
While these numbers may seem unattainable at the moment, especially considering the massive crash in the market that began the year, Lightning technology may well be the boost that Bitcoin needs to achieve these numbers.
Further than Bitcoin
While Bitcoin is the most prominent cryptocurrency involved with the network, it is also being tested with Litecoin, Ethereum, Zcash, Ripple, and Stellar. All of these digital currencies are sure to get a major price appreciation from Lightning technology.
Not only will the technology be applicable for like-to-like cryptocurrency transaction, the open source nature of the protocol will allow a conversion between different cryptocurrencies across separate blockchains, a process that has been dubbed atomic swaps.