Today we’ll talk about the Lightning Network, one of the next big developments for Bitcoin. While Bitcoin’s price is finally receiving some love, is lightning going to strike?
Back in the early days of Bitcoin, the developers saw that the standard blockchain wasn’t big enough to handle everyone’s transactions. To solve this problem, some of them decided to attach a new payment network to Bitcoin-one that was faster and cheaper than the main blockchain.
The Lightning Network uses Bitcoins, but it operates on a completely different principle. Instead of waiting for transactions to be mined, users simply exchange vouchers, like an IOU, which is an informal document that acknowledges a debt that’s owed. The system is optimized towards micropayments, so the fees were designed to be tiny. Using the lightning network, you can send someone less than a penny, but for large payments you better use the main blockchain.
The Lightning Network has also got some problems. One of the main criticisms of the system is that you can send at most a few hundred dollars at a time. That should improve as the network gets bigger, but you won’t be using it for anything big. Speaking of users, there aren’t that many of them. The total capacity has now reached two million dollars, but that’s nothing compared to Bitcoin’s 60 billion dollar marketcap. With these figures it will be a long time before you can shop at Starbucks with Bitcoin.
On the bright side for Bitcoin holders, the crypto appears to be seeking recovery, and on Monday it attempted to break above the daily Ichimoku cloud for the first time since August 2018. While it has a number of barriers to break, this new bullish momentum may help Bitcoin to reach the $5,000 level in the next couple of months. Pay close attention to major resistance levels and if you’re planning to buy, it may be best to wait for a pullback.
Now I’d like to hear from you. After you’ve subscribed, head over to the comments section and let me know what you think the future holds for Bitcoin and the Lightning Network.
Remember that as the 4th point of the IDDA technique, you must calculate your risk tolerance before deciding on the investment strategy that is suitable for your portfolio. Don’t forget to complete your risk management due-diligence before developing your investment strategy.