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Lightning Network Development Forges On, As Bitcoin Fees Decline To Under One Dollar

Lightning Network Development Continues

Blockstream, a firm focused on the development of cryptocurrency infrastructure, recently announced the release of c-lightning 0.6, a protocol built on the Lightning Network.

For the uninitiated, the Lightning Network is a Bitcoin scaling solution built upon the idea of near-instant transactions that cost under a cent. The early stages of the Lightning Network rolled out within the past year, have been met with mixed reviews, with some stating that it isn’t ready for widespread adoption.

This new and improved protocol is a complete revamp of the previous version, allowing for the implementation of new features, that will hopefully allow for a better user experience.

The new features included in c-lightning 0.6 are as follows:

  • Lightweight Nodes

This feature allows for a c-lightning Bitcoin node to be run on low-powered devices like the Raspberry Pi, allowing for higher node adoption.

  • ‘Gossip’ Protocol

This new protocol essentially allows low-powered and mobile devices operating on the Lightning Network to use less bandwidth while syncing up with the network, saving bandwidth through the omission of data that isn’t needed.

  • API Stability

The API stability seen in this new update will allow for projects to be built on top of c-lightning, as Blockstream will support the API for the “foreseeable future.”

  • Wallet and sync

C-lightning now has a wallet that supports on-chain and off-chain funds for the Lightning Network. This system will be fully secure, with users not being required to directly interact with the wallet to move funds to the internal wallet

  • TOR support

This feature is simple enough as c-lightning now accepts nodes run over the TOR network, increasing the privacy and anonymity of node operators.

  • Payment Logic

Some users of the Lightning Network find trouble making consistent transactions. However, c-Lightning 0.6 has improved its logic system, allowing for better transaction management through “automatic retires for routing failures, randomization of route selection and better feedback about the current state of a payment.”

Lightning Network Grows At A Rapid Rate

Many users criticized the Lightning Network for having a low Bitcoin capacity, with some users reporting that the network had a capacity of less than one Bitcoin. This was true, there were only 46 channels for the Lightning Network in January, bringing its capacity to around 0.682 Bitcoin. Since then, the Lightning Network has grown rapidly, and now has over 7,800 open channels with a staggering 26 Bitcoin channel throughput.

The Blockstream Blog stated:

That is a 16,856% increase in channels and a 4,084% increase in channel capacity in 6 months!

Many users hope that this adoption can continue, as the Lightning Network cements itself as a viable way in which Bitcoin can scale to the masses.

Bitcoin Fees Drop To Manageable Levels

Although development continues on the popular scaling solution (Lightning Network), Bitcoin fees have dropped to sustainable levels, finding stability at around one U.S. dollar. Although seen as a positive development by some, others have begun to worry that this decrease in fees in due to lack of interest in the use of the Bitcoin blockchain. Some attributed the slowdown to decreasing prices (and hype), along with other users just ‘HODLing’ their cryptocurrencies.

In addition, Segwit adoption has also become prevalent, with many cryptocurrency services offering support for Segwit as a way to decrease transaction fees. This $1 fee is a far cry from what was seen months ago, as Bitcoin fees temporarily reached over $50. At that time, users began to criticize BTC for having fees that resembled traditional financial institutions.

Since then, Bitcoin fees have remained a popular topic in the industry, as altcoins like Ethereum and Litecoin offer fees that are often under 10 cents. It is clear that if Bitcoin fees will need to continue lower if it wants to hold its place as the figurehead of ‘digital cash’, through the use of scaling solutions like Segwit and the Lightning Network. 

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Bitcoin Transaction Fees Spike as Bithumb Hurriedly Tries to Clear its Hot Wallet in the Wake of the Recent Hack

Bitcoin transaction fees are currently triple their value less than 24 hours ago. Also, there are reports of transaction backlogs as the network appears congested.

Bitcoin Transaction Fees Triple in Less than 24 Hours

At the time of writing this article, the average BTC transaction fee is $2.75. This figure is more than triple the cost per transaction yesterday. In fact, BTC fees haven’t crossed the $1 mark for most of 2018.

According to Sergej Kotliar, the CEO of Bitrefill, the reason for the spike in BTC transaction is because Bithumb is hurriedly trying to clear out its hot wallet. Bithumb, a South Korean cryptocurrency exchange platform recently suffered a cyber-attack. The hackers stole more than $30 million in cryptos.

Explaining the situation, Kotliar said:

Possibly related to their [Bithumb] hack would explain them overpaying 100x on fees for consolidation. This does put [a] strain on the whole network, and everybody’s fee estimators.

Miners usually prefer to mine the blocks with the highest fees first. With Bithumb seemingly desperate to move funds quickly, it appears their transactions are being given priority attention. This situation leaves other “normal” transactions in temporary limbo.

Kotliar, however, does not think the situation will last for too long, saying:

This is a temporary thing. Will likely have blown over tomorrow, two days at most. This is not a repeat of December/January.

Another Twitter account, “WhalePanda” had this to say about the situation:

Bithumb is paying crazy fees to consolidate everything now (assuming it’s not the hacker), driving up the overall fees for everyone on the network. Is this a problem? No, not really. It’s definitely annoying, but not really a problem, it’s temporary.

In December 2017 all the way to the beginning of February 2018, Bitcoin transaction fees reached record levels. Also, the network was bogged down by slow confirmation times which regularly reached more than 20 hours per transaction. However, the introduction of protocol upgrades like SegWit and Lightning Network significantly reduced fees on the network.

The Curious Case of the Bithumb $28 Million Tax Fine

Less than a fortnight ago, Bithumb was cleared of tax evasion charges in South Korea. However, the platform still incurred a $28 million tax bill for unpaid taxes. In the early hours of Wednesday, 20 June 2018, reports emerged that the platform had been hacked to the tune of $30 million. The proximity between the two events has caused some in the crypto community to suspect some foul play.

The platform hasn’t revealed which of the coins in its holdings were affected by the hack. Bithumb has even deleted a few tweets about the hack leading to a few raised eyebrows of people monitoring the situation

Do you think the current spike in BTC transaction fees is a temporary anomaly? What are your views on the Bithumb hack happening so close to its $28 million tax fine? Keep the conversation going in the comment section below.

Images courtesy of Twitter (@ziggamon and @WhalePanda).

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