This is the last part of our Interview with Allen Piscitello from Blockstream. In this section, we go deeper into the functional aspects of Lightning Network. He also explains how Asset transactions can be a way for retail-type payments, and how to do it. Lastly, what the vision for the future looks like for Liquid and how it can influence global financial settlement systems.
Allen Piscitello (Vice President of Product Management at Blockstream )
Interview Date :17th January 2020
Lightning Network
Lightning Network is a technology layer for Bitcoin and Liquid. It allows people to do a settlement process (transaction) nearly instantly and that for nearly 0 fees. In other words, if I opened a Lightning channel to you, we would both put in money. If I want to pay you, we would just have to keep track of how much we owe each other, and keep the ledger updated. We don’t even need to share that with other third parties. If you decide to go away from the lightning network, you can do so and close your side of the channel. Although, the network has a policy that goes in effect if you try to close your side with an earlier ledger of a time when you had more money. Then I can prove that you trying to do fraudulent transactions and can get you punished for it.
That is the simple version of Lightning. Now, in the real world, it’s routing these payments not from me through you, then through someone else you know, and continuing on doing this world-wide scaling in order to be able to routing funds, but rather in a fairly private way. Let’s say I’m paying someone 5 destinations away from you. I just need to tell you who to pay next , and they will have to pay the next person while it is still secure. They can only update this ledger if they actually payed the next person like they were required to.
Thus, I believe Liquid and Lightning are complementary, and I think Lightning is going to be used for low value account, whereas Liquid is very useful for big chunky payments that need to happen very quickly for the exchanges.
We absolutely would love to do an integration of Lightning and Liquid in the future. So we already have support for Liquid for L-BTC, that is Liquid-Bitcoin which is currently available. We wanted to support assets, but there are some technical hurdles in the way. They would require some changes in the lightning network but we know how to solve it, so it’s just a matter of time till we get there.
Asset Transactions
Let’s suppose you have the idea of creating another digital asset by using Tether as it is a good example of a stable coin. The way it work is that a certain individual deposits money in their bank accounts where Tether is applicable. Tether will give you a Token that is worth the deposited amount, which in return you can use it through the network. Right now, blockchains just in general aren’t good at scaling for huge volumes of transactions. But with a Lightning network, you are taking those payments out of the chain as not all people need to know about final settlements. If you do that with an asset, this would be useful for a retail-type of payment application of a stable coin where it can be used in high frequency. If I would pay a tokenized dollar instead of Bitcoin, I would be able to do it now on the Liquid network.
Blockstream’s Devoted to Technology Improvement
We do a lot of research on Bitcoin. Our research team is devoted to technology improvement. Dr. Pieter Wuille is one of the developers that has been in the space the longest. He has worked at a lot of big features like SegWit, Taproot, MiniScript, and also a technology called Simplicity. Simplicity is a smart-contracting language design to be verifiable. This is very different from something like Ethereum’s Solidity which is designed to write smart contracts very easily. However, Simplicity is designed to be very rigid and easy to prove what’s happening.
Our long-term vision
I think Liquid is the proving-ground for our technology where everything is coming together. Cryptocurrency is the first natural fit for this application because people are already doing it this way. We are starting to see some of the traditional financial systems starting to slide more into the space. We are seeing companies like Fidelity getting into Bitcoin, and other financial firms looking at Bitcoin as a digital securities. I think we are going to see those two world converge.
As this grows, we are going to see either Liquid or a federation, that is very similar to Liquid, starting to be used in global financial settlement systems. There is a lot of problems in this as of yet; people who have more shares of a stock, they think they own it just because the whole system is a mess. You can solve a lot of these problems with the technology Liquid is based on. Our goal is to make Liquid successful, prove to the world that you can start settling these assets, and be able to verify a crack in the system but still maintain that confidentiality. I think that it will spread even more to other financial systems as well, and that is the vision of our company.
Interviewer , Editor : Lina Kamada
【Disclaimer】
The Article published on this our Homepage are only for the purpose of providing information. This is not intended as a solicitation for cryptocurrency trading. Also, this article is the author’s personal opinions, and this does not represent opinion for the Company BTCBOX co.,Ltd.