The Lightning Torch: How the Community United to Teach Jack Dorsey About Feeless, Rapid Off-Chain Transactions

Over the last few weeks, Bitcoin's second-layer scaling protocol, called the Lightning Network, has gained a lot of traction, steadily proving to become a viable solution to BTC's infamous scalability problem and even potential competitor to American payments giant Visa.

A brief history of the Lightning Network, an ambitious campaign to tackle Bitcoin's scalability.

"The payment network Visa achieved 47,000 peak transactions per second on its network during the 2013 holidays, and currently averages hundreds of millions per day. Currently, Bitcoin supports less than 7 transactions per second with a 1 megabyte block limit."

Enter LN, a network of off-chain payment channels, which require almost no fees and allow for fast, seamless transactions that are made on a layer above the actual blockchain.

"With an off chain payment channel you can deposit $100 once, and pay network fee for it, and then pay to your favorite shop as many times as you wish, without paying any transaction fees to the network, to the sum of $100," explains Eyal Shani, a blockchain researcher at consulting group Aykesubir.

"Instead of paying a transaction and sending it to the entire network, you send an encrypted and signed 'promise' that you owe that other party, say, $10 out of the $100. Finally, if the paid party needs the money for another purpose, they close the channel by sending the promise to the entire network. Theoretically, you can do millions of transactions for the price of twice the network fee."

Although the LN has been designed specifically for Bitcoin's blockchain, Shani adds, the concept can be performed on other blockchains - for instance, there is the Raiden network created for Ethereum.

The process somewhat resembles the Olympic torch relay, hence the name "The Lightning Torch." Eventually, the hashtag #LNTrustChain began circulating to ease communication among community members involved in the experiment, giving the movement an additional boost on social media.

"The goal is to get to the Lightning Network tx cap at 4.29 Msats," Hodlonaut says.

In response, Anthony Pompliano, founder of Morgan Creek Capital - an institutional investment house with $1.5 billion in assets under management - suggested that Kroger should deploy the Lightning Network in its stores.