Is Bitcoin usable now?! Lightning Network will change Bitcoin Forever

Yo, yo, what's up guys? Welcome back to Box Mining. Today I want to take a really serious look at Lightning Network because after this whole week, we've seen so many different people using and sending Bitcoin on the Lightning Network for just one or two Satoshis. It's nearly instantly free. It's nearly free and it's almost instant. It's like two to three second confirmations. And it's a scaly solution that a lot of people have been waiting for. I mean, Bitcoin has this reputation of being slow, of being hard to use, of being like expensive. But with the Lightning Network coming and becoming more popular, it means that we can send Bitcoin instantaneously, very small fees, and with more privacy because the intermediate steps are really cut out. So that's really worth exploring. And recently I did have a huge event, which is I took the Lightning Torch from Ivan on Tech. So what is this Lightning Torch? It's this amount. So it's 336 million Satoshis that we've been passing around to each other. So it's just the community, the Twitter community really passing around. And this is just to show that, well, there's two solutions, scaling solutions is coming. Bitcoin is coming to scale and will become a real means of payment. And honestly, the best way to learn about Lightning is to really show it in action. So I actually filmed myself sending the 36 million Satoshis to Mia Tam. And well, here's a transaction. Can you guys see this? All right. So she sent me an invoice right here. And this is in the form of a QR code. So I'm going to press the send button, scan button on my phone, use camera, click that. So it has the amount right here, 3,590,000 Satoshis. In terms of dollar value, it's $142. And I'm going to just press the pay button and boom, that's a Lightning transaction sent. So as you guys can see, this is really fast. The ability to send like Bitcoin at that speed, at two to five seconds speed, that instantaneously is almost like a miracle. When I first heard about Lightning, I thought this doesn't make sense. I mean, Bitcoin confirmations are every 10 minutes. And if you want to really be sure you want to wait for three confirmations. So it's at least half an hour before, you know, for a fact that you can, that you got your Bitcoin. So how does this Lightning transaction work? So how exactly does Lightning work? Well, very clearly to explain it, not all transactions on Lightning is broadcast to the Bitcoin blockchain. That's what makes Bitcoin transactions slow. It's because if you want to broadcast the Bitcoin transaction, you got to broadcast it, wait for it to be packed into the next block. And you're going to pay a fee. The miners need a fee. And we saw that fee go up to a thousand, not a thousand, a hundred dollars during the last bull run, but it can get quite expensive. So you need to pay a fee. They need to wait for the confirmations. One, two, three block confirmations. That's typically enough to kind of feel safe that this is being sent. And that might take upwards of 30, 40 minutes. So how does Lightning get away with not broadcasting all those transactions and information is a relies on a series of mathematical proofs. And it uses the Bitcoin blockchain, not as a record of transactions, but it uses it as a way to arbitrage if something goes wrong. So say, um, if someone did try to double spend and scam someone and, um, try to submit bad information, both parties can submit their evidence to the blockchain. And because the blockchain is neutral, it's decentralized. It relies on mathematics rather than on emotion or person. You can rely and it can be, uh, know that the outcome is always fair and just. So long as you provide provided you manage to, um, submit these proofs. So from a theoretical standpoint, all these layer two solutions, and you probably heard of Raiden on Ethereum, which is very similar to lightning or even plasma, they all rely and use the primary base blockchain for arbitrage for, um, fixing problems. If they come, it becomes the blockchain essentially becomes the judge and the juror rather than a simple accountant, you know, just processing a bunch of transactions. That's what makes layer two so exciting. It's because you can do so much more in layer two, but you have the same amount of security and, um, as, um, and decentralization as you would if you were just, as if you're just using Bitcoin. And this is why you trust people sending Bitcoin on it. Now I do have to say that lightning is at the very early stages too. And of course there are drawbacks. And of course we're very early on in the stages. Now, when the transaction I showed you, I use the blue wallet and the blue wallet is very easy to set up. So, I mean, you can just do it right now and you should do it. Why not just test out this technology, see what it's like, see what this layer two solutions all about. And blue wallet is good because it it's easy to set up and you can start receiving and sending lightning transactions immediately. Now their flip side is that for blue wallet, it's a custodial wallet, which means that the money is actually all the Bitcoin rather is stored on blue servers and they can technically just run away with it. So the best way to actually keep your funds is to actually run your own lightning node. And that's kind of like the next step. That's what, that's the blue pill I took. So once I kind of, um, used the wallet, did a transaction and by running your own node, you keep your own funds and you keep all the proofs that, you know, those mathematical proofs that I was talking about, you keep those two. So if anyone does try to scam you, well, if you're your proofs, your keys, well, they won't get away with it because Bitcoin is there to protect you. That's the backbone of lightning. And why is everyone tweeting or talking about the lightning network is because finally this it's moving away from just a theoretical, oh yeah, we think it can work to something that is actually being implemented. So right now, if you go to one ML, this is the website to look at what's happening on the lightning network. So you have 6521 nodes and people opened up those channels to communicate and we have 750 network capacity. So this is how much, uh, the network can handle at its maximum. Obviously not every connection, not you, if you go down the rabbit hole, not every transaction will, will have that capacity limit. There's a cap to how much each channel can take and lightning needs to find the best path to go through it. So yeah, that's my node. It's up, it's called box lightning. If you guys want to connect to me and form a channel, you know, uh, that's my URI. You can also leave a comment with your URI. If you guys learn to set it up and also I'll definitely make a video sometime about how to set up your own node. Um, and there's also come some, a few readily available products to actually just like one click, um, set this up. So Casa node. So the reason why you want to set this up rather than say use blue wallet itself is because blue wallet, um, they keep their funds for you and it's not, it's pretty much, um, I subscribe down to, if it's not your own keys, it's not your crypto. So at that sense, you want to have your own node and to be, um, contributing to the network as well. So you can actually make some money off this too. So eventually I'm going to make a tutorial about either how to set it up yourself, um, manually via a box or, um, buy one of these things to set it up. So, yeah, so, so testing it out is pretty incredible. And my personal opinion was that this test out of the easiest way possible, you know, just go download blue wallet, test it, um, tap the test of tipping app, make your own invoices and well, it's good to go. Now, speaking about some drawbacks of lightning as well, you probably heard me talk about the word invoice a few times in this video. So with lightning, you can't directly send to an address. You actually must request an invoice from that person. And that actually allows pretty much the node to link up. So that's a requirement. You can't directly just say, oh yeah, um, let me send to this Bitcoin address. It just doesn't work like that, but rather, um, you must request, uh, uh, a payment invoice that expires in one hour. So you can actually see that this works a lot better for say, retail shops, say you buy coffee, you can see a QR code pop up and you can pay it. And the second drawback of lightning is that if you really want to run a full node, if you really want to keep, you know, your funds safe, which is a case that I do, then you will have to have right now a little bit more expertise. And finally, sometimes the network capacity doesn't work. So I've tested it as myself as well. Occasionally some payments do fail. So it really depends on how your own, how the node that you're connected to is set up and who they have channels with. Now there to answer a few of the other points as well. Why it's such a, uh, a lot of people either love it or hate it. It feels like lightning, um, people are split into two camps. So either you feel like it's going to solve the problems of Bitcoin, or you feel that block size is going to solve it, but lightning is going to completely fail. Now, I do want to say that right now it is still an experimentation project. There are still many things about lightning. That's not perfect yet. And there's a lot of improvements in the future. For example, um, there's this talk about neutrino where it can just make download your own node and the node only runs on your phone when it needs to essentially acting like a wallet. And it might be the case that some things just don't work, but every step that we're making right now is making sure that it works a little bit better. So I feel like, um, I definitely feel like lightning is one of the biggest trends of 2019 and that we will have more and more lightning usage and adoption, especially with more mobile apps coming in. Now we can finally, finally allow crypto merchants to accept crypto and they can know that every time they do receive that they don't need to wait for confirmations. They have mathematical proof that they received that Bitcoin. Uh, if you guys have any questions as well, I'd love to hear what questions you have about lightning, what concerns you have. And definitely, you know, the more we learn here, uh, the better it is that we understand. And if you really hate lightning too, just leave a comment below. I'd love to hear why that you don't like it. And well, you know, we can discuss and learn together. So guys, thank you so much for watching today's video. See you guys next time.