Lightning Network Apps (LApps) will change the way we use bitcoin and other cryptocurrencies. Through the use of these LApps, participants will have increased access to scalable, super quick, and very cheap micro-transactions using bitcoin, Litecoin, and beyond.
What is the Lightning Network?
You’ve no doubt heard about the scalability problem with cryptocurrencies, most notably, bitcoin. Blockchain proponents want global adoption of cryptos, meaning they want to be able to use their virtual currencies everywhere for everything.
But how can crypto businesses scale their operations when micropayments done on the Bitcoin Blockchain are slow, costly and unable to mesh with other blockchain protocols?
The Lightning Network has a solution for these problems and is opening the door into a new era of blockchain adoption. Lightning Network Apps (LApps) are the software applications that enable crypto users and businesses to access the Lightning Network’s scalable, cheap, and super-fast micropayments system.
How will the Lightning Network enable micropayments?
The Lightning Network makes all this possible through the use of two main ways:
- Smart Contracts
- Off-chain, peer-to-peer ledger entries.
With these two systems in place, transactions can take place without having to broadcast each one to the entire blockchain as with the current process with bitcoin.
No longer will users have to wait for confirmations on the blockchain before completing their transactions. Instead, two users set up a payment channel, so to speak. They will use it for multiple, off-chain transactions while being bound by a smart contract.
The result is the ability for projects using Lightning Network apps to offer off-blockchain transaction settlement. No matter how small or how often these transactions happen, the fees will be low, the speed will be almost instantaneous, and the level of security still high (but possibly not as high as bitcoin’s).
Lightning Apps and interoperability
On top of all that, LApps have numerous other potential benefits:
- They enable users to experience interoperability between blockchains, opening up a whole new world of cross-collaboration and payment settlement without 3rd parties.
- Whereas before the reality of buying your daily coffee with bitcoin seemed more like a pipe dream, with LApps, we could really begin to see crypto adoption picking up speed at the e-commerce and retail levels.
- Finally, a crypto payment solution such as this has the potential to enable businesses, from Main Street to the cloud, to break into the ‘crypto as a payment’ era.
Which blockchains are using the Lightning Network?
Thus far, three blockchains have connected with the Lightning Network. They are bitcoin, and then Z-cash and Litecoin, which are both forks of the bitcoin blockchain. So now those blockchains enjoy interoperability with each other. Instead of switching out BTC for LTC by trading on an exchange, for instance, two peer-to-peer parties may be able to engage in an atomic swap, which is a blockchain to blockchain transaction.
What is a Lightning App (LApp)?
By definition, a Lightning app is a software application that provides a product or service and utilizes the Lightning Network and its crypto payment support mechanisms.
LApps are also interoperable with each other. This means they have the capacity to deal directly with one another without a 3rd party such as an exchange, Visa, or big banks,
How are LApps different from decentralized apps (DApps)?
LApps are actually a kind of decentralized application (DApp). One could even say they are even more decentralized because they allow for increased 3rd-party-free transactions. Before LApps, most crypto transactions were done (and are done today) through 3rd party cryptocurrency exchanges. Some are done peer-to-peer, between one user and another. But now, LApps will allow this type of peer-to-peer transaction to happen on a large scale.
What kinds of Lightning Apps exist today?
According to the Lightning Apps Directory, there are 5 major types of LApps that exist today. The space itself is in its nascent stages so most of these are under development. More innovations are sure to come!
Though it’s not quite ready yet, HTC is planning to release the Exodus crypto phone, which will have a Lightning Network hardware wallet built right in.
Until then, there are several other wallets, including Zap (iOS and Desktop), Éclair (Android and Desktop) and Shango (iOS and Android). To get details on additional wallet choices, visit LightningNetworkStores.com. They list dozens of them, all in different stages of development.
LNCast is a great example of integrating Lightning Network capabilities with a product, in this case, a Lightning Network Podcast.
Bitrefill is another instance of integration between the Lightning Network and the retail world. On the LApp, Bitrefill users can recharge their prepaid phone cards using bitcoin or Litecoin. CoinMall is a decentralized marketplace for digital products that enables sellers and buyers to use bitcoin or Zcash.
These entities help developers and innovators use the Lightning Network. One example is 1ML, a Lightning Network search and analysis engine.
Tools are proliferating as developers continue to innovate in the space. One example is a WooCommerce plugin, which will act as a gateway for accepting Lightning payments.
Radar Ion recently announced the release of a set of Lightning Network developer tools. One of them is the Lightning Invoice Decoder, which can be used for analyzing payment invoices.
These LApps have already taken off as they represent a super simple way of using Lightning that everybody loves. LightningTip is a LApp that’s in beta and creates an easy avenue for users wanting to accept tips using the Lightning Network. Tippin.me is another tipping LApp that is widely popular.
How will Lightning apps affect Bitcoin?
Bitcoin has held steady during the bear market and has been reigning as the top crypto for years. Its dominance only seems to grow. Yet using bitcoin for payments has not become an easy thing for the masses.
Up until now, bitcoin has been seen more as a store of value, a way to earn long term for miners, or a speculative object for avid traders. But for paying for ordinary things, like a cup of coffee or a gadget, only the crypto diehards have had the patience for that. They well know it’s a somewhat arduous, time-consuming and, at times, expensive way to make microtransactions.
But now, if LApps can help facilitate bitcoin payments while staying secure and decentralized, well that’s the bitcoiner’s dream! But how will scalable microtransactions in the crypto market affect bitcoin?
- They’ll enable bitcoin to have more interoperability with other cryptocurrencies.
- More people may transact in BTC it due to added functionalities and potential for scale.
- The value of bitcoin, one would think, would rise as it would be in more demand.
What are the effects of LApps on Litecoin and other cryptos?
Many people who have been in crypto for a while will tell you that when bitcoin succeeds, so do all the other coins. But Litecoin (LTC) already has lower transaction fees than BTC. So in a way, it may be even more equipped to take on micropayments at scale.
At this stage in the game, however, mass adoption and interoperability start with bitcoin. Likely this will have a positive (not quite a ripple!) effect on the rest of the industry, including other altcoins.
All in all, by introducing more LApps, enabling wider interoperability, and making micropayments faster and cheaper, the cryptocurrency market stands to gain quite a bit. This is especially so with businesses using bitcoin and Litecoin. That’s because these two coins are frontrunners in the efforts to pioneer the world’s first peer-to-peer micropayment system.
Also published on Medium.