Grasping Lightning: Mapping the Key Players in Bitcoin’s Next Phase

You might have heard of bitcoin’s “lightning network,” but don’t know what’s going on with it right now. Who are the mysterious big players behind this magical technology that allegedly solves all of bitcoin’s problems?  

Lightning is one of the most promising technologies in the space right now, even drawing in Square and Twitter CEO Jack Dorsey. Given current technical constraints, blockchains don’t support many users, let alone the world’s population. Lightning could multiply the transactions possible, while making transactions faster (like a millisecond) and cheaper. 

Nerds have eagerly been putting the technology to the test. A range of lightning games have come out, such as one channeling the hit game Fortnite. And it’s possible to buy Domino’s pizza and Amazon gift cards with this new internet money. 

But, while yes, lightning sort of works, there’s a lot of work to be done. The technology is still risky and not easy to use. Although the theory’s there, how it plays out in practice remains to be seen. 

Here’s a breakdown of the big players across the globe tinkering with the underlying technology every day, trying to improve it so it doesn’t “suck” anymore.

The lowest-level coders are working on so-called lightning implementations, the code which puts the payment network into practice. Each has its own approach to the network.

The best-known of these is LND, created by Lightning Labs, with CEO Elizabeth Stark at the helm. Dorsey invested in the firm early in 2018.

Behind-the-scenes, there are many more developers, working on implementations such as Blockstream’s c-lightning and France-based Acinq’s Eclair. While the developers behind each of these softwares tend to focus on different features and they’re written in different programming languages, all three are interoperable, meaning transactions can be sent between them with no bumps. To this day, developers from these three groups continue to hold bi-weekly IRC chats to discuss future changes to the protocol specifications.

To confuse matters further, there are still other lightning implementations on the fringe. With a decentralized payment network, anyone can make their own version.

Rust-lightning is a security-minded implementation headed by Square Crypto engineer Matt Corallo, who’s been writing bitcoin code since he was a teenager. Japan-based startup Nayuta has built a lightning implementation specifically geared toward the Internet of Things. As more and more devices, whether toasters or TVs, connect to the internet and gather data, these same devices may need to make tiny payments too, to say, automatically charge an electric car, the company contends. And bitcoin’s lightning may be the only payment system in the world that allows for payments that small. 

None of these coders is flashy. They put out announcements about how they’ve successfully created “multi-path payments” or “watchtowers” from time to time. While clouded in esoteric tech-speak, these announcements essentially mean that the technology is improving, and hopefully getting easier to use. 

This is all happening in the background. But what about actually using lightning, even if it’s risky? 

Right now it’s not easy. Most of the most-used wallets out there, such as Coinbase and Blockchain.info, don’t support lightning payments yet, because the technology is still experimental. (There are exceptions, such as Electrum, a long-standing light-client wallet which added support for lightning last year.)

For the most part, a parallel ecosystem of daredevil developers have been creating completely separate bitcoin wallets that allow users to send and receive lightning payments. 

There’s a lot to choose from. Acinq’s mobile wallet Phoenix is one of the oldest and most-employed non-custodial wallets, meaning users have full control of their private keys.

Lightning desktop wallet Zap started as a one-person side project by young developer Jack Mallers. One feature of the wallet that power users love is that it hooks up with what’s known as a “bitcoin node.” This stores every on-chain bitcoin transaction made in its 11 years, the most secure way of using bitcoin. Zap lets you make lightning transactions from your smartphone, while running one of these clunky full nodes at home.

Wallets like Breez and BlueWallet are taking different approaches to building a slicker interface for lightning.

And that’s just the tip of the lighting bolt.

All this assumes the user already has bitcoin.

If they do, they can use one of these wallets to send to a lightning “channel,” like a separate specialized bitcoin account secured by a smart contract that lets you start making lightning payments.

But, if users want to buy lightning-powered bitcoins directly with USD, skipping a step, they enter a highly experimental realm. 

Most other major exchanges, such as Binance, Coinbase, and Huobi, don’t have that capability yet while the technology is still maturing. BTCC, for example, told CoinDesk that “[m]ost people do not understand Lightning Network at present. We will support Lightning Network a bit later to acquire more user adoption.”

Exchange Bitfinex is the largest exchange so far to adopt lightning, meaning users can deposit or withdraw payments in the experimental form of the digital currency. But this makes up a small overall percentage of its transactions so far. Meanwhile, Breez lets users in 35 countries buy and sell lightning directly with a credit card.

While adoption across bitcoin companies is minimal for now, the goal for many of these players on the vanguard fringe of bitcoin is that once lightning is mature enough, most bitcoin wallets and exchanges will absorb it.

If UX challenges don’t get in the way, it could one day become the dominant method of bitcoin payments. It offers cheaper and faster payments after all.