It’s time to find out what the protagonists have to say. In TALKING HEADS, Bitcoinist will ask the experts about the cryptoverse’s overarching themes and latest news. This time, we have an all-star cast that’s as diverse as the times we’re living in. Prepare to have your mind electrified by these talking heads’ ideas and reasoning.
Today’s theme is the Lightning Network. The idea that it might be a Proof-Of-Stake system comes from one of the original Bitcoin luminaries, Andreas Antonopoulos. “This talk took place on March 29th 2016 at the Blockchain Meetup in Berlin, Germany,” and Andreas blew everyone’s mind when he said that Bitcoin would have a PoW and PoS hybrid system, because The Lightning Network is…
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There’s something to the Proof-Of-Stake idea. To provide liquidity to The Lightning Network, nodes have to stake Bitcoin. And the size of that Total Value Locked in a node affects what it can do and who can it transact with. And it generates fees. Your locked stake generates money, just like in a PoS system.
However, Antonopoulos might’ve been wrong on this one. First of all, no consensus is necessary in the Lightning Network. Secondly, the Lightning Network doesn’t issue coins. Finally, a medium node can compete with a large node, especially if it’s well managed.
But, that’s introduction enough. Let’s cut to the chase and read what our superstar guests have to say about the subject.
BTC price chart for 11/23/2021 on Bitstamp | Source: BTC/USD on TradingView.com
“Lightning is a layer 2 that is created on a PoW and performed on a PoW, I wouldn’t classify it as either a PoS or a PoW. The analogy I would use is more of an attached payment system that is built on top of the existing Bitcoin network, similar to an aggregator.”
– Norelle Ng
Tim Behrsin – Founder and CEO at Grexie
“Proponents of the Lightning Network might argue that since validators stake Bitcoin to provide liquidity to transactions that happen between users, that it is a Proof of Stake system. However there is no proof that happens, the proof is provided by the Layer 1 Bitcoin protocol, and the Lightning Network is merely a match maker between liquidity providers and spender-receiver channels. Proof of Stake systems use a mechanism to achieve consensus among a network of validators, in which fees are allocated for performing proofs of the network’s validity and security, rather than a medium of exchange, as in the case of Lightning Network.”
“Yes, Lightning is a Proof-Of-Stake system, but it redefines its meaning because unlike other stake systems where you just leave your crypto stationary, in Lightning it depends on the efficiency of the channels you open, your rate policy, the availability of your hardware and the business model you establish for your node. It’s hard to reach the break-even point, but it offers countless new monetization possibilities that we’re still discovering.”
– Fernando Motolese
Luis Molina, Co-Founder of Superalgos
“Lighting Network is not a Proof-Of-Stake protocol because it is not a class of Consensus Mechanism for blockchains, which is what Proof of Stake is. In fact, the Lighting Network is not a blockchain at all, but rather a Layer 2 payment protocol built on top of one. Even though the Lighting Network has the concept of Payment Channels that needs to be funded, their purpose is to facilitate payments between network users rather than to achieve consensus.”
– Luis Molina
And those are all the enlightening opinions that we have for you today. Bitcoinist immensely appreciates our guests’ time and knowledge. The TALKING HEADS section wouldn’t be possible without them.
Before we go, let’s start a new tradition. We’re closing this section with a Talking Heads tune.
Talking Heads, “And She Was”
This one’s from “Little Creatures,” the band’s 1985 album.
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