As we have already announced, from Bitnovo we have added our own Lightning Network! node, which will allow our users to make instantaneous transactions with zero network commission on our platform.
This news makes us one of the first companies in the world to have our own active node so that our users can exchange cryptos or fiat money and receive Bitcoins through the Lightning Network. Proving once again that Bitnovo is at the forefront of crypto innovation and development.
But behind this spectacular news is a talented team of developers who work hard to keep Bitnovo and Spain at the top of innovation.
Today we interviewed José Molina, Engineer Blockchain of Bitnovo, who has offered to tell us the behind the scenes of this incredible advance for the company.
For two reasons:
About four months. There has been a significant amount of I+D+I, given that we are working with a technology with still little adoption that is in beta version. We are talking about incomplete documentation, inconsistencies, outdated data after a few weeks, constant software updates, etc.
There are many developers participating directly or indirectly in the software required to participate in the Lightning network, and thanks to their excellent work we now have access to this new form of payment. However, it is also true that such a fast and changing development is not so free of bugs and inaccuracies.
All of this has required us to take extreme precautions in order to operate safely and offer a quality service to our users.
“Bitnovo plans to be on the cutting edge of technology to walk that path, wherever it leads.”
I would say that obtaining incoming liquidity. This is actually a fairly well-known problem and certainly one of the most serious in the early stages. When you open a Lightning channel to another node, at that moment the amount of bitcoins used in its opening becomes on your side of the channel, while the other side has a balance of zero.
This means that you can send on that channel, but the other party cannot. At least until a send has occurred that moves the balance of the channel, transferring part of the funds to the other end.
This shouldn’t be a problem for most users, since they usually just want to send bitcoins, not receive them. Now, what about the natural recipients of payments?
Let’s think of a store that sells goods and services in exchange for bitcoins. This business can open outgoing channels to other users, but it is interested in having an incoming flow, not an outgoing one, so it is not very useful to open channels initially. The solution is to go to Lightning channel buying and selling markets, where certain well-connected nodes offer to open channels (and therefore increase the incoming flow of those nodes with which they interact) in exchange for the payment of a small commission.
On the other hand, another problem we could have is the sending of large amounts of bitcoins by our users. The greater the amount sent, the more difficult it will be to channel payment through the Lightning network. However, this case has an easy solution: all Bitnovo users have to do is open a channel to our node with an initial balance equal to or greater than the amount they want to settle. In this way the payment will not have to go through the whole network, but will be executed directly through the newly opened payment channel directly with our node, thus ensuring that the amount the user wanted will arrive without problems.
Selfie de José with his dog Vermouth, two inseparable companions.
I think this is a great first step towards the digital transformation of payment systems that is to come. Cryptos work exceptionally well for value transfer, reducing the tedious costs and times of the traditional banking system. However, in the face of payments they have not finished working well, since there is uncertainty about whether or not the payment has taken place at a given time due to the way blockchains work.
The Lightning Network technology, in my opinion, represents a blow on the table that will end up capturing the attention of many people who thought that cryptos were not worthwhile as a means of payment. LN proves that it is perfectly possible to carry out value transmissions at zero cost and in a matter of milliseconds and with total certainty. Thus, it allows users to be their own bank, greatly increasing their privacy, and also minimizing any possible errors.
Let’s not forget that cryptos are in a very early stage of development and still have a lot of growth ahead of them. They still have a lot to prove in order to gain the trust of users, but the appearance of this technology represents a giant step in the right direction, without a doubt.
“The Lightning Network technology represents a coup on the table that will end up capturing the attention of many people who thought that crypto currencies were not worthwhile as a means of payment.”
Curve showing the increase of the total value stored in the Lightning Network.
Bitnovo users will be able to settle their funds on the Lightning Network through Bitnovo, so the ten, twenty, or thirty minutes required to send Bitcoin will become ten, twenty, or thirty milliseconds. In addition, the uncertainty about payment is eliminated at the root, since you have instant confirmation.
We hope that this will encourage our users to make use of the Lightning network in their daily lives, giving them an outlet for their bitcoins if they need it. We also hope that this will encourage merchants to accept payments on Lightning by increasing the user base using this payment system.
To open a Lightning channel users have to follow the following steps:
To use the Bitnovo Lightning Network service, (e.g. sell BTC for Euros) the user must follow the following steps
I have no doubt that the Lightning technology is here to stay, at least until another better technology comes out to replace it. Its advantages are so many that it will undoubtedly attract the attention of many users, especially given the economic situation in which we find ourselves: a scenario where central banks are generating inflation to finance the States to the detriment of savers, who are being harmed by a more than considerable devaluation of the fiat currency.
It is natural for people to look for alternative financial systems to preserve their wealth, and cryptos represented an incomplete option as they lacked effective means of payment… until the appearance of Lightning Network, of course.
However, we are only witnessing the birth of Lightning. We still have much to improve, but we are already beginning to see very hopeful green shoots for its future.
“The advantages of LN are so many that they will undoubtedly attract the attention of many users, especially given the economic situation in which we find ourselves”
If you want to know more about how LN works, see our article: What is Lightning Network?
You can also read the interview we conducted with our CEO and founder Marcos Muñoz, where he explains why the arrival of Lightning Network to Bitnovo is so important for Spain to the world.