Lightning Network - implementation and consulting

Lightning Network is one of the leading add-on protocols over the first level blockchain platform that allows for almost instant transactions and transfers of funds in small volumes at the expense of low fees. Boosty Labs, as a world-class fintech and cloud engineering team with a solid background of practice that combines consulting, strategy, design and engineering at scale, can integrate this technology into an existing business and/or provide Lightning Network consulting services.
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Lightning Network Areas of Application

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Online games

Microtransactions are an essential part of any MMORPG game. By embedding the Lightning Network client in the game client, you can make transactions using Bitcoin in the game.

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Banking channels

Since the implementation of a channel requires three basic elements, then by developing a banking system of smart contracts on top of a regular database, it is possible to create channels in which we operate with an electronic pound or dollar. Unlike cryptocurrency channels, the guarantor of the execution of a smart contract in this case will not be the mining community, but the bank's internal processing system. Thus, it will be possible to create decentralized exchanges that operate not only with cryptocurrencies.

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Paid torrent

Torrent monetization is possible with the Lightning Network implementation. In the Torrent model, there are peers – nodes that download a file, and seeds – nodes that distribute a file. Using these technologies together, you can make a buyer from a peer and a seller from a seed. In the Torrent system, files are divided into small parts, and if the same file exists on two computers, then the download will occur simultaneously from both. Since the files are split into parts and distributed across several computers, and the Lightning Network allows you to make micropayments, you can pay to download a particle of the file. If the node that distributes the file goes offline, then we will continue paying to another node that has the required file. By operating with small payments, we reduce losses when not providing a particle of the file.

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Payments in messengers

The use of payments in instant messengers has already become widespread in Asia. In the Chinese messenger WeChat, which has a user base of about 2 billion people, one in three uses the internal payment system of the chat. However, the yuan, unlike cryptocurrencies, does not have the potential to spread to other countries. The introduction of the Lightning Network client into the messenger will make it possible to use bitcoin as an internal currency.

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Real-time-crediting (RTC)

By analogy with the RTB advertising market, the Lightning Network implementation can create a real-time lending market. Let's say a user has a Lightning Network wallet built into their browser. He goes to the ICO or exchange website and wants to buy a token, but realizes that he does not have enough money. In this case, if he subscribed to the real-time lending service and went through the necessary registration stages, then his application goes to the lenders' marketplace, where each of them decides whether he is ready to lend the specified amount and on what terms. Since the payment network is not limited by the framework of one state, the number of potential creditors increases. The more lenders there are, the more competition is, which is tantamount to improved credit conditions, which is good for users. By connecting to the RTC, lenders get access to the flow of applications from all over the world without having to worry about finding credit traffic.

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OpenBazaar

At OpenBazaar, a peer-to-peer market for goods and services, transactions are made using bitcoin, but fees on the bitcoin network can become an obstacle to buying goods and services, the cost of which is comparable to the fee itself. The introduction of the Lightning Network client can partially solve this problem.

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Browser wallet

At the moment, payment for services/goods in the bitcoin network occurs through the widgets of online wallets. In order to pay for something using bitcoin, you need to be registered on the online wallet website. Each online wallet only provides access to a subset of online stores that are registered with their system. By connecting to one Lightning Network, online wallets will provide access to more online stores that accept payments in cryptocurrency. Also, due to the integration with the Lightning Network, if desired, it will be possible to pay locally from a computer, for example, through a wallet built into the browser.
Also for the wallet with the Lightning Network, the built-in browser will open up such an opportunity as streaming payment for content. Let's say, instead of paying for a Netflix subscription, you can pay for a movie by the minute. In addition, it will be possible to get access to the paid content of the site without registering and specifying secret data.

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Gambling

There are already dozens of proven gaming portals where you can play for bitcoins and use the Lightning Network for deposits and payments. These BTC casinos have managed to gain recognition from players and have earned a good reputation.

Lightning Network Benefits And Features

Very low commission

Any transaction on the Lightning Network will be much cheaper than a transaction on the Bitcoin network.

The ability to send small amounts

Due to the low commission, transactions of several cents can be carried out.

High transaction speed

Since transactions on the Lightning Network do not end up on the blockchain, they are carried out almost instantly.

Scalability

Each channel on the Lightning Network can handle up to 500 operations per second. And the more such channels, the higher the throughput.

Security

Channels can remain open indefinitely due to the relative timeout function and there should be no risk of interference; if someone tries to steal funds by closing the channel, the other participants in the transaction will have enough time to make their own requests for funds and get them back.

The problem of scalability of the blockchain on which bitcoin is based is becoming more acute with the growing popularity of the first cryptocurrency. So far, it is being solved by means of the second level platforms, and the Lightning Network is one of the leading protocols-add-ons over the first level platform. Using the Lightning Network allows transactions to be carried out virtually instantaneously, such as private chat messages between two users. In addition, the commission is reduced and it becomes possible to transfer funds in small amounts.

How Lightning Network works?

Let's say you decide to pay for groceries at your nearest store using cryptocurrencies. However, this is unlikely to be beneficial, since the amount of payment will be small, and the commission will certainly exceed the cost of the purchased product, and the wait for confirmation of the payment may take more than 10 minutes.

Using the Lightning Network protocol, the client gets the opportunity to create a two-way channel with the store and purchase goods almost instantly, with a small commission. Why the buyer and seller transfer the previously agreed amount in cryptocurrency to a multi-address.

On the platform of the first level, the opening of the channel is recorded. So the seller is guaranteed to receive coins if the channel is closed.

After the channel is deployed, the crypto path to the store is open. Let's say the total purchase was 0.0003 BTC. To make a payment, it is necessary to write off the specified amount from the buyer's balance and add it to the seller's balance. After the transaction is completed, the new report is certified by the parties.

As long as the cryptocurrency remains on the balance of the store, the buyer can purchase the goods. In this case, you can make an infinite number of deals in the channel, since they do not require confirmation because the actions take place outside the main blockchain.

Multichannel transactions

What should a person do if he wants to buy everything through MTC? Open two-way channels with every potential seller? No, for these purposes, you can use already created channels, generating a kind of chain. This technique can be compared with the theory of six handshakes, in which all the inhabitants of the planet are from each other. Multichannel transactions are based on the same principles.

In the Lightning Network (LN), a transaction looks for the shortest path from sender to receiver through nodes (intermediaries). The load on the main platform is reduced, but at the same time the level of operational safety is reduced.

Any user can become an intermediary, and of course, scammers too. Node holders themselves determine the size of the commission, which is usually significantly lower than the commissions in the first level platform. In order to avoid trouble, when choosing nodes, you should inquire about the amount of funds on its balance. If there are not many of them, then it is better to look for another intermediary.

The user can close the channel at any time. The procedure is simple – a report is sent, certified by both parties, which is checked and entered into the register of the main blockchain. Even if millions of payments are made in the channel, only two entries will be recorded on the main platform – about the opening and closing of the channel.

The Lightning Network was presented at a conference in Montreal in the fall of 2015. Since then, the number of users has increased hundreds of times, and this is largely due to the second-level platforms, the leading of which is LN.

The secret of LN's growing popularity is simple:

  • Any transfer in the system is much cheaper than standard payments in the first level blockchain and bank transfers in fiat. Moreover, in a highly competitive environment, some intermediaries themselves offer money for the passage of a transaction through their nodes. This can be compared to a negative bank rate;
  • The speed of operations in the channels is significantly increased;
  • The ability to quickly conduct "microtransactions" that would have waited a long time for confirmation in the main system;