A Lightning Network is basically a “Layer 2” payment protocol propounded by Joseph Poon and Thaddeus Dryja, who published a draft of their proposed plan in the Lightning Network white paper, in February 2015. It is specifically designed for faster, cheaper and more private payments. The inherent peer-to-peer features of the Lightning Network ensures faster transactions of participating nodes to overcome the Bitcoin scalability issues. As such, when Bitcoin was first coined by Satoshi Nakamoto in the year 2008, someone in the name of James A. Donald made the very first public comment criticizing Bitcoin for being unable to scale. In his words, “the way I understand your proposal, it does not seem to scale to the required size.” A decade later, scalability still persists to be the biggest problem for Bitcoin and the entire cryptocurrency clan. Lightning Network is expected to overcome this issue very soon.
The payment channels in a Lightning Network contain multi-signature addresses in which two users hold a private key and share the funds. When one user makes a fund transfer to the other, they update their respective balances in the payment network, which then gets translated into funds.
Crypto exchanges and Lightning Network
The Lightning Network adds another layer to the Bitcoin exchanges. Contrary to the process that has been prevalent since 2009, which is to record every transaction in the decentralized ledger of blockchain, Lightning Network does not necessarily need the entire ledger for every single transaction. Therefore, it has managed to gear up the speed of recording transactions in the blockchain network.
As compared to custodial exchanges, Lightning Network can execute a trade in a faster way where even the most liquid cryptocurrency Bitcoin can be interoperated. Sparkswap has come up with the first-ever Lightning Network-enabled cryptocurrency exchange to allow traders to use both Bitcoins and Altcoins within seconds without the need to deposit assets to a third party.
How is Sparkswap is unique
SparkSwap is unique in the fact that it can work with multiple Lightning wallets. Bitcoin users use a fee-free ACH transfer to a US-domicile escrow account which is held by payment partners of SparkSwap. Then from here, SparkSwap through the atomic swaps does the transferring of the Bitcoins into the user’s wallet. This technique ensures that the process is completely noncustodial.
Popular Lightning wallets
Here is the list of some of the most popular Bitcoin Lightning wallets that are curated for having user-friendly interfaces.
Bitcoin Lightning wallet
This is one of the most robust lightning apps that is compatible with Android, which allows users to do all their Bitcoin and Lightning transactions conveniently on their Android devices.
Zap
The Lightning Network wallet is compatible with both the smartphones and desktops that include iOS, Android, Mac, Linux, and Windows operating systems. Zap interface allows users to receive and send Bitcoin payments conveniently over Lightning Network.
Spark
Apart from the wallets mentioned above, Spark is also available on Android, iOS, Mac, Linux and Windows platforms, and web browsers and uses c-lightening on its backend. It eases out the Lightning Network transactions over multiple wallets. Due to this wide range of compatibility, this has emerged to be one of the most widely used Lightning Network wallets.
Éclair
This app enables its users to create Bitcoin wallets and also to provide support for the emerging Lightning network technology. This wallet has a unique selling attribute, which helps it to serve as a regular Bitcoin wallet even if the users do not want to use the Lightning Network technology.
Satoshi Wallet
This interface is compatible with both Android and iOS. Like any other fiat currency transaction, Satoshi Wallet also allows seamless Bitcoin transactions.
Sparkswap for your Desktop
SparkSwap has come up with an exclusive desktop application feature, USD-to-bitcoin purchases, that enables direct sats deposits into a user’s Lightning Network wallet. It allows customers to buy Bitcoins directly (using USD) into their Lightning Network wallets.
Building a Lightning Network-enabled cryptocurrency exchange is a brand-new endeavor for the startup company, and therefore the effort is still in its nascent stage. Time will prove its efficiency in the long run; till then, it needs encouraging support from the global crypto players.