Electrum Bitcoin Wallet Lightning Network Supported in Next Release

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The next release of major Bitcoin (BTC) wallet software Electrum Bitcoin Wallet will support off-chain scalability solution Lightning Network (LN).

The Electrum official Twitter account announced the upcoming LN integration in a tweet sent on Oct. 14. The tweet announced:

“The next release of Electrum will support Lightning payments. Our lightning node implementation has been merged into Electrum’s master branch.”

Electrum also confirmed that the wallet will employ a new implementation developed in-house, written in Python.

High hopes for Electrum Bitcoin Wallet and Lightning Network

Lightning Network is believed by many Bitcoin proponents to be the solution to the network’s scalability limitations. Recently, the chief strategy officer at Bitcoin technology firm Blockstream has said that the current block size capacity may not even be needed in the future if off-chain scaling solutions such as Lightning become widely used.

That being said, the current LN implementations are still experimental and bugs are still being uncovered.

As reported at the end of September, at the time LN developer Rusty Russel has published the full disclosure of the network’s vulnerability discovered in August, which — if exploited — could lead to theft of funds.

What is Bitcoin Lightning Network?

Hailed as one of the most potent solutions to cryptocurrency scaling currently under development, the lightning network effectively creates a layer on top of bitcoin, enabling fast and cheap transactions which can net settle to the bitcoin blockchain.

Proposed by Thaddeus Dryja and Joseph Poon in a 2015 white paper, the idea is based on a network that sits on top of the bitcoin blockchain, and eventually settles on it. The network is comprised of user-generated channels that send payments back and forth in a secure and trust-less fashion (trust-less means that you don’t need to trust or even know your counterparty).

Say, for instance, that I wanted to pay you for each minute of video that I watched. We would open up a lightning channel, and as the minutes rolled by, periodic payments would be made from my wallet to yours. When I’m done watching, we would close the channel to settle the net amount on the bitcoin blockchain.

Because the transactions are just between me and you and don’t need to be broadcast to the whole network, they are almost instantaneous. And because there are no miners that need incentivizing, transaction fees are low or even non-existent.

How it works

First, two parties who wish to transact with each other set up a multisig wallet (which requires more than one signature to enact a transaction). This wallet holds some amount of bitcoin. The wallet address is then saved to the bitcoin blockchain. This sets up the payment channel.

The two parties can now conduct an unlimited number of transactions without ever touching the information stored on the blockchain. With each transaction, both parties sign an updated balance sheet to always reflect how much of the bitcoin stored in the wallet belongs to each.

When the two parties have done transacting, they close out the channel, and the resulting balance is registered on the blockchain. In the event of a dispute, both parties can use the most recently signed balance sheet to recover their share of the wallet.

It is useful to note that it is not necessary to set up a direct channel to transact on lightning – you can send payments to someone via channels with people that you are connected with. The network automatically finds the shortest route.

Development of the technology got a significant boost with the adoption of SegWit on the bitcoin and litecoin networks. Without the upgrade’s transaction malleability fix, transactions on the lightning network would have been too risky to be practical.

Without the security of the blockchain behind it, the lightning network will not be as secure, which implies that it will largely be used for small or even microtransactions which carry a lower risk. Larger transfers that require decentralized security are more likely to be done on the original layer.

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