Elon Laments Bitcoin’s Speed and Proposes Lightning Network

The news comes on the heels of China’s recent crackdown on Bitcoin mining.

By
Chung Yee
on
May 23, 2021
Category:
Blockchain News

Musk At It Again

The man that has 55.6 million followers and arguably the most influential individual in Crypto Twitter is certainly never short of controversies. In a Tweet, Elon Musk dropped a hint by suggesting a scalable solution through Lightning Network after criticizing Bitcoin for its massive energy consumption. Ross Nicoll, a Dogecoin developer, revealed that the eccentric billionaire was not just trolling when he tweeted the following:


Problems with the Bitcoin Network 

Bitcoin, the world’s first cryptocurrency. Bitcoin was created as a payment solution. It was meant to be a superior form of money that is immutable, decentralized, censor-proof and it is an uncorrelated financial asset. This narrative has changed through the years as Bitcoin has gone through phases of self discovery. Today, newer and more innovative solutions through other blockchain technology have relegated Bitcoin to play the role as a store of value. The problems faced by Bitcoin is the lack of scalability. It is slow, expensive and congested. 

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At the time of writing the cost of transacting on the Bitcoin network is $22.55 and has seen a high of $62.79 on April 21, 2021. This is a far cry compared to other networks that can handle huge volumes of transactions for a fraction of the price. 


How the Lightning Network Works

The Lightning Network is a ‘second layer solution’ and it enables transactions to be done ‘off-chain’. Conceived by developers Thaddeus Dryja and Joseph Poon in 2015, it interacts with the Bitcoin network without needing the blockchain to verify transactions. Therefore, theoretically it can process hundreds of thousands of transactions instantly making it suitable as a settlement solution. It solves the two most crucial factors as a mode of settlement, speed and costs. 

The network creates a channel of payment between two users to enable off-chain transactions. This would enable micropayments between participants. 

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However, Elon is not necessarily displaying his genius to point to a solution that has been around for ages. Lightning Network has its own problems. There are costs associated with its use, it is prone to malicious attacks, and the price fluctuation of Bitcoin makes it unsuitable to be used as a mode of settlement.

Lightning Network can be a valuable addition to the Bitcoin network, but if we take a step back, the community that has invested in Bitcoin sees the crypto asset more as a store of value. The narrative has since changed from its inception. It is the new digital gold. It is meant to hedge against inflation just like gold. Payment solutions are more suitably dealt with using stablecoins such as the USDC, rather than the plodding, clunky, and transactional-difficult Bitcoin.


Elon’s Involvement in Dogecoin 

The lovable meme coin that has been getting a lot of attention as a result of Elon Musk’s constant tweeting has more stories to tell. Ross Nicoll the core developer of Dogecoin discloses that they have been in talks with the billionaire since 2019. Elon raised eyebrows when he Tweeted about working on their development with the team, sparking more speculation involving the token.

Nicoll disclosed that they have received an offer for funding from Elon and declined, which comes as no surprise considering the history of Dogecoin. Anyone who has been in the crypto space long enough never took Dogecoin seriously. The coin was started off as a joke and was created from a borrowed code. It was never meant to play any serious role apart from generating a few laughs and to be a lighthearted meme. 

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It was interesting to guess what Elon has in mind for the crypto community. But the interest has since waned as more investors begin to believe that the constant Tweeting that moves the crypto market is manipulative and to a certain degree, irresponsible. The vision of creating the blockchain is to democratize the financial system. The constant flip-flops by a billionaire with massive following on Crypto Twitter creating spikes and dips as the direct antithesis to the vision that many of us share. 


Time to Focus on the Bigger Picture

Whilst the crypto market is fighting the bears, there is a bigger picture. Undoubtedly, Bitcoin and other crypto assets have changed the lives of many. To be overly fixated with some random tweets from an eccentric billionaire would not do the community any benefit. It is time to focus on creating value and sustainability. The path forward could be through the Lightning Network or other scalable solutions. It is time to treat Elon just like any other player in the market, and to stop assigning everything he says on Twitter such high levels of agency in the market.

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Chung Yee

Chung Yee has a legal background and has been involved in research works for the legal and compliance industry. Writing is his passion, centered on topics such as the blockchain and finance.

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