Bitcoin (BTC) and its network are considered the foundation stone laid in the world of cryptocurrencies and blockchain. Created in 2009 by Satoshi Nakamoto, bitcoin is now accused of harming the environment, because of its protocol Proof-of-Stake. It is also criticized for being an expensive and slow network when it comes to transactions. But the bitcoin does not let it go and saw the birth of the Lightning Network project in order to facilitate transactions on the network and allow the arrival of NFTs and stablecoins.
Bitcoin, a network singled out for its operating errors
Bitcoin suffers from a scalability problem due to the characteristics of its network. Indeed, for a transaction to be validated, it takes about six confirmations. However, it takes approximately 10 minutes for a block to be added to the blockchain and allow for transaction confirmation. Bitcoin also suffers when its network is overloaded with a large number of transactions, sometimes making transactions very expensive and slow. Recently, the European Union wished to “ban” bitcoin, in March 2022, by prohibiting the Proof-of-Work. This protocol is considered harmful to the environment. In the end, the draft regulation of cryptoassets did not pass through the European parliament. A ban on this protocol would have harmed the cryptocurrency sector, which is very dependent on this system (like Bitcoin and Ethereum).
The Lightning Network, a solution for Bitcoin?
The Lightning Network is a real innovation for Bitcoin. It solves several problems. First, this new “sub” network gives the possibility of paying on the blockchain ultra-fast without worrying about block confirmation times. Safety is ensured by smart contracts of the blockchain, avoiding creating a multitude of transactions to make individual payments. Second, the payment speed is greatly improved by the Lightning Network. This network has the capacity to handle millions if not billions of transactions per second. This capability far exceeds existing payment networks, such as Visa or Mastercard. Third, the Lightning Network enables low-cost transactions. Thus, by achieving exceptionally low fees, Bitcoin enables new use cases such as instant micropayments, such as in El Salvador.
But what is the connection between the Lightning Network and NFTs on the Bitcoin network?
Lightning Labs, the team behind the Lightning Network announced the launch of their new protocol named Taro as well as a fundraising of 70 million dollars. In November 2021, the Taproot upgrade to the Bitcoin protocol added a new signature algorithm named “Schnorr’s Signature”. Ella has also improved the confidentiality of transactions on the network. Thus, this previous update of the Bitcoin network allows the implementation of the Taro protocol. This protocol transforms the Lightning Network into a multi-asset network. This transformation will make it possible to transfer and issue stablecoins on the bitcoin network at very low cost. Lightning Lab Director Elizabeth Stark also explains that if the Taro Protocol is adopted, it could allow the issuance of fungible assets like stablecoinsbut also non-fungible and therefore NFTs! In the endit should be noted the existence of the Raretoshi project which offers access to a marketplace on the side chain Liquid thanks to the Bitcoin network. The project therefore has the ambition to settle on the most secure and decentralized blockchain in the world, while making sure to minimize costs. It is therefore necessary to monitor these projects in the coming months!
Thus, it is a matter of time before NFTs take over the Bitcoin network. Despite the criticisms leveled against the first cryptocurrency, the Bitcoin network offers its users a reliable and secure network.
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Student passionate about entrepreneurship and fascinated by the technologies behind cryptos! And yes, I am convinced that the two are intimately linked: blockchain and NFTs are revolutionizing many sectors and presenting unprecedented opportunities.
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Bitcoin network: NFTs and stablecoins are coming
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