Now we know Bitcoin will officially activate SegWit, it’s time to take a look at what that means for users. Developers of the Lightning Network and “payment channels” say this will make everyday transactions faster and cheaper, and make bitcoin micropayments possible again.
All technical debates aside, all end-users really care about is whether Bitcoin functions properly to make payments and transfer value. (OK, many also just hold and hope it reaches a million dollars per coin someday, but Bitcoin has to be useful for that to happen.)
In this video, “the Dogefather” Jackson Palmer explains there are many types of payment channels, and Lightning Network is just one of them. Essentially, they take smaller transactions (like buying a cup of coffee or micropaying a content creator) and put them on a second “layer” — which reconciles with the main blockchain some other time.
Why did we need SegWit to create these? Actually we didn’t, Palmer says — however, we needed it for them to work well. Watch the video to see how separating cryptographic signatures from transaction data helped fix the problem.
While there have been several payment channel proofs-of-concept, they’ve never been tried or used on the scale Bitcoin will require. How well they work in real-life will determine how people use Bitcoin, for years into the future. No matter where you stand in the Bitcoin Scaling Debate, this information will be useful.
Who is Jackson Palmer?
Jackson Palmer is well-known in the cryptocurrency world, mainly for creating Dogecoin in 2013. Based on an internet meme featuring a shiba-inu dog, DOGE was intended as a community-oriented money for people who didn’t want to take their blockchain too seriously. Around since 2013, Dogecoin has a cult following and at several points in its history, has had a serious nine-figure market cap.
Jackson’s “regular” job is Group Product Manager, Creative Cloud Entertainment at Adobe. He lives in the San Francisco Bay area.
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