Even after crashing last week, Bitcoin is still valuable as hell. But, like, why? The question of what Bitcoin is actually good for is becoming more urgent as its price, and the stakes, keep rising. If the answer is "nothing," then Bitcoin's future is in peril.
When Bitcoin hit the scene in 2009, it was thought of as a new kind of money. But as more people started using Bitcoin, the network became slower and more expensive; now, high fees have effectively priced out less costly uses of Bitcoin like buying groceries. Over the last several years, the developer community has considered a couple solutions to the problem, one of them being the Lightning Network.
You may have heard about the Lightning Network already, because an alpha version for public testing was released on January 10, and what may be the first-ever Bitcoin purchase was conducted using it on Saturday; it was a VPN service. This made a lot of people very excited, because even though the Lightning Network isn't ready for mainstream use, it seems like it's getting closer.
If the Lightning Network succeeds, then Bitcoin could become faster and cheaper to use, allowing it to make a stronger case for itself as being the supreme blockchainversus newer competition like Ethereum and Bitcoin Cash. But just what the hell is it?
A Bitcoin transaction is best thought of as a message that's posted to the blockchain, which is a ledger secured by computers that have to do some serious math to add the next entry. Bitcoin is slow and expensive because every message, no matter how small, has to be computed and shared with all of the computers in the network.
It's a pretty wasteful system, but what if you could post only the most important messages to the Bitcoin blockchain, and in batches as opposed to real-time? If that were implemented, the thinking goes, the way we use the blockchain now might one day seem like drilling a new oil well just to pump a tank's worth of gas. So, developers Joseph Poon and Thaddeus Dryja proposed the Lightning Network in 2015.