Elizabeth Stark on Lightning and the Bitcoin Blockchain
The Lightning Labs cofounder explains Bitcoin network issues with rare clarity. Addresses high fees, blockchain clogging, block size, and how Lightning hopes to solve the scaling problem.
Lightning Labs: Break It Down
Do I have even have to? Elizabeth Stark Follow @starkness , cofounder of Lightning Labs, delivers a crystal clear explanation of current Bitcoin issues and controversies. It is rare in cryptocurrency to find someone so eloquent and succinct. She entered this interview well-prepared and answered questions using easy to understand analogies while avoiding confusing insider jargon. This is the type of information and education that is helpful to new Bitcoin users. If you find yourself needing a slower walkthrough of the content, continue reading as I summarize the important points.
(0:22) High fees and slow confirmation times. These are the problems people are trying to solve on the Bitcoin network. It is important to understand that both problems are a result of the enormous popularity of Bitcoin and the heavy traffic on the Bitcoin network. Consider them growing pains. The challenge for Bitcoin is to scale its infrastructure to effectively serve its increased traffic and usage without sacrificing what makes Bitcoin great.
Stark uses the example of a congested road as an analogy for the Bitcoin blockchain. The blockchain is a series of blocks that contain the transactions users report and agree to. All transactions are recorded on the blockchain and verified by the network from the first transaction until the most recent transaction every time a new transaction is recorded. Think of the blockchain as a constantly updating ledger of every Bitcoin transaction in history. Still following?
Because of the large demand to record transactions on the blockchain, transaction confirmation times become delayed. This is an obvious nuisance similar to the frustration of a traffic jam. Escalating fees are paid to bypass the traffic and get transactions done faster. High fees reduce the usefulness of Bitcoin as a currency.
Stark mentions two possible improvements to the current system, Segregated Witness (SegWit) and Batching. Without getting technical SegWit uses blockchain space more efficiently by fitting more transactions onto each block. Batching condenses multiple transactions into one transaction reducing the amount of transactions needed to accomplish the same amount of work. These are terms you will see frequently in Bitcoin discussions online. Now that you understand the basics, we can talk about the real reason Elizabeth Stark did this interview, her work with Lightning. (Below, a popular Bitcoin Twitter user encourages SegWit and Batching as countermeasures to high fees.)
.@ErikVoorhees I wonder if you could be interested to encourage companies you know to integrate segwit and halve that. (and similar for batching, change aggregation and better fee estimates). many are inexplicably complaining about fees, and yet over paying 10-20x thru inaction!
— Adam Back (@adam3us) December 21, 2017
Lightning: Solution or Illusion?
(1:33) Elizabeth Stark was patient in waiting to talk about her Lightning project. When she finally gets her chance, she describes it as a software layer built on top of the Bitcoin network. She claims Lightning will allow users to make instant transactions at a layer above the actual blockchain (layer 2). While Lightning handles the instant transactions at the layer 2 level it will take pressure off the blockchain by reducing the traffic and workload at the blockchain level.
The interviewer has obviously done some homework because he raises a popular counterargument. He asks, why add a new layer of software when you can just make the blockchain more robust by increasing block sizes? This is one of the chief controversies in the Bitcoin community at the moment. “Bitcoin Cash”, a rival cryptocurrency to “Bitcoin”, favors increasing block size to accommodate more traffic and decrease fees, while “Bitcoin” has shunned bigger blocks in favor of solutions like Lightning. Beware! This debate can become hostile!
To her credit, Stark answers this retort with professionalism and tact although she clearly disagrees. She argues that increasing the block size is like adding more lanes to a highway, but Lightning is akin to teleporting instantly. More lanes can always be clogged by more traffic, but Lightning is a technological advancement rather than a mere size improvement. (Below a Twitter user offers his opinion on the scaling controversy in terms we just discussed.)
Can you explain something to me? How does increasing the block size solve, rather than just defer temporarily, the scaling problem? Seems to me that Lightning, even though it’s not perfect, has a better chance of making Bitcoin more scalable
— Robin Green🌹🔰 (@greenrd) December 23, 2017
Elizabeth concludes the interview with several reassurances and optimistic expectations. To briefly highlight, she mentions that Lightning software has been released for testing since January. She claims that Lightning can be used to make transactions of less than one cent. Additionally she revealed Lightning is working with developers from exchanges and can even be used to circumvent exchanges completely.
Finally she offers her vision of Lightning acting as a checking account for Bitcoin users. In other words when needing to make instant everyday transactions for goods or trading, you use Lightning. When you are done you withdraw your Bitcoin back to the blockchain. She finished by assuring that these complicated processes would be automated for the user and would not require an advanced understanding to operate.
This was an excellent and informative interview. Elizabeth Stark explained with clarity the most important issues and innovations taking place in the Bitcoin community today. I hope you enjoyed this video and learned something. Please comment below if you have any questions, or corrections regarding this post. Thanks for reading!