Bitcoin’s second layer, Lightning has been on an absolute tear this year with massive growth in adoption. While everyone enjoys insanely fast payments, there is something deeper going on with the Lightning Network that Bitcoiners believe will transform how we interact with the internet long term.
Lightning is a P2P mesh network connecting all users. As the network grows and gets more resilient we will see an incredible amount of LApps built on top of the network. Right now at the early stages, the focus is not on building as many LApps as possible. Currently, most development is focused on key infrastructure, experience consistency, and strength of the network. There are a few resources you can check and see what LApps are already available at https://lightningnetworkstores.com/, lapps.co/, dev.lightning.community/lapps/
As the network is developed out we will see substantially more products and services built on top of Lightning. Without a functioning and strong Layer 2, everything built on top would be susceptible to failure and major breaking. Believe it or not, there have been nearly $7 billion in funds lost this year alone on other chains. This is why Bitcoin Core dev’s and Lightning developers put such a focus on doing things right, the first time. In October of 2021, some LN Devs met in Zurich to talk about the current state of Lightning and how it develops into the future. One topic they discussed was a “big bang” approach where everything is rolled out at once or an iterative approach. You can read more from the notes of Olaoluwa Osuntokun here.
Looking into the future
This last month our team met at The Atlanta Bitcoin Conference and I had the pleasure to connect with many Lightning developers and engineers. What really caught my attention was hearing from BitcoinCoderBob that “most people will be introduced to Bitcoin through Layers 2 and 3”.
When you think about Bitcoin, how many people will buy the asset, transfer it from one wallet to another, or even create a cold storage seed phrase? Out of the 100+ friends I have introduced to bitcoin, the only ones who make this step are ones I intentionally walk through the process. There are still many people who do not buy Bitcoin in the first place unless a friend really takes the time to help them learn.
This is where the valid idea of people being introduced to Bitcoin with Layers 2 and 3 makes sense. We will see more Bitcoin native products and applications made that operate by sending information over payment channels. Some examples currently live on the market are, https://getzion.com/, https://sphinx.chat/, and https://www.fountain.fm/.
If you want some examples of what can be built in an MVP (minimum viable product) format, at prior Lightning Hackathons you can see how things like telephones can be made over lightning. This is just an example of things that can be made in a shorter sprint period of time.
Will it be Layer 2? Will it be Layer 3?
There is no defacto answer to how all of this will unfold just yet. I spoke with a few engineers this last week to hear where they suspect Layers on top of Bitcoin will go. Layer 2 currently is handling payments and has some applications built on top. If we continued to put the entire internet on Layer 2, there would be bandwidth issues or a clogged network.
Here is a screenshot example of how the internet works from a visual perspective.
You can see that it is not one single layer. You like me, probably do not have a full grasp of how the internet works on a micro-level. But we use it daily, nearly flawlessly. We are seeing this EXACT same type of development unfold on top of the Bitcoin Protocol with Lightning and other layers. To my knowledge, there is no hard definition of Layer 3 will precisely do just yet. Impervious.ai is one of the first movers developing out more advanced networks on Lightning.
This points to what I mentioned earlier. How most people will be introduced to Bitcoin through Layer 2 or Layer 3. As these layers develop out, we will see Bitcoin integrated into legacy providers of services, and we will see brand new products and services made that are Bitcoin native.
We are seeing the infrastructure of the truly decentralized web built out of in front of our eyes. It is one of the most exciting times in human history! I truly hope this helps you understand a bit more from a simple level where Bitcoin is heading.
If you have never run your own node, or have never interacted with Lightning, I would encourage you to download a lightning wallet and start to explore how the technology works. Have fun and feel free to hit me up if you have any Q.