It appears that moves are afoot to try and save Bitcoin from its scalability problem. It can only handle a few transactions per second due to the distributed ledger nature of blockchain (Bitcoin ledgers are replicated over roughly 200,000 computers) and the compute intensive nature of the calculations required to ensure transactional integrity. Also fees for processing transactions are high, making small payments impracticable.
Enter stage left an idea called Lightning Network which is based upon establishing a private channel between 2 parties through which multiple transactions can be routed for a finite period of time. At the end of this time, the channel closes and reconciliation of the final state is broadcast under a single transaction. This enables quick initial transactions and reduces fees. It also includes protocols for dealing with any claims one party has against the other.
Apparently, a number of startups (e.g. Acinq and Lightning Labs) are bringing inter-operating solutions to market very soon which exploit Lightning network. The question is will this be effective. On the one hand, one can see that for B2B trading, it has some advantages and it may work well for B2C transactions where there is an account relationship, with say monthly statementing. However to my mind it is moving Bitcoin from being a cryptocurrency and into the realms of becoming a crypto credit card. Given the current mood for regulation, this means that Bitcoin could get dragged into the scope of consumer credit regulation, which as it will cross many jurisdictions is a potential night mare.
So on the one hand, Lightning Network may help. On the other it may cause immense complications. So, it may be an accelerator for certain types of trading, but it is not a universal panacea.
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