Bitcoin prices have shot through the roof, yet again!
While some of us might be sulking from the notional loss of not having invested in the cryptocurrency earlier, the rest of the population doesn’t seem to have this view.
At the time of publishing this article, the price of a single Bitcoin on Luxemburg-based Bitcoin exchange Bitstamp was around $14,624.
The price of a single Bitcoin, however, broke all boundaries when it touched the $15000 mark earlier in the day.
So what is the reason behind this massive price push of Bitcoins?
Abhishek Gopal, the Co-founder and CEO of blockchain startup ThroughBit, attributes this price push to the adoption which Bitcoins are getting into the mainstream financial economy.
Earlier this month, the US-based Commodity Futures Trading Commission (CFTC) allowed two exchanges to start trading in Bitcoin contracts. News reports suggest the CME Group, and CBOE Global Markets exchanges are expected to offer Bitcoin futures later this month, with rumours of even the New York-based NASDAQ offering the same.
Experts say the major reason for today’s high can be attributed to the successful beta test of Lightning Network, an overlay network built on top of an existing Blockchain – in this case, the Bitcoin Blockchain.
It is a decentralised network using smart contract functionality in the Blockchain to enable instant payments across a network of participants. A smart contract is a computer protocol intended to facilitate, verify, or enforce the negotiation or performance of a contract.
Showing a new way to pay with Bitcoin, according to media reports, the technology would move some transactions away from the main Blockchain to ease the congestion of Bitcoin transactions. Lightning Network will allow buyers and sellers to then transact privately and later broadcast the activity on the public network.
On Wednesday, three Blockchain developers – ACINQ, Blockstream, and Lightning Labs – which were instrumental in the Lightning Network, announced the 1.0 release of the Lightning protocol, and the world’s first Lightning test payments on the Bitcoin main net.
Each of the three teams developed specific Lightning implementations: ACINQ developed eclair, Blockstream developed c-lightning, and Lightning Labs developed lnd, according to a report in Bitcoin Magazine.
The test was predominantly to see the interoperability of these implementations across the network, where payments are routed without being isolated.
Speaking to Bitcoin Magazine, Elizabeth Stark, CEO of Lightning Labs, said,
“Interoperability is key to making Lightning a success. We have worked for over a year to design a specification so that we and other developers can write implementations that talk to each other. This ensures that no matter which implementation a user is using, they will be connected to one Lightning Network.”
So, how will Lightning Network help future Bitcoin transactions? The Lightning Network website says the following:
Instant Payments: According to the Lightning Network website, the Lightning-fast Blockchain payments ensure fast payments without worrying about block confirmation times. Security is enforced by Blockchain smart-contracts, with the payment speed in milliseconds to seconds, as compared with 10 minutes, which is the time taken for one Bitcoin transaction.
Scalability: The Lightning Network also claims to make it possible for millions of transactions to occur per second across the network.
Low Cost: By transacting and settling off-Blockchain, the Lightning Network allows for exceptionally low fees, which allows emerging use cases of Bitcoin micropayments.
Cross Blockchains. Lightning Network completes a transaction outside the main Bitcoin Blockchain, giving the transaction speed, and it is later merged into the main Bitcoin Blockchain.
However, a report by CoinDesk says Lightning developers stressed there are kinks left to work out before your prefered coffee shop starts accepting payments in Bitcoin.