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Scaling Cryptos: Bitcoin Lightning Network vs Ethereum Raiden Network by mooncryption

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· @mooncryption ·
$11.29
Scaling Cryptos: Bitcoin Lightning Network vs Ethereum Raiden Network
Hi everyone. This article will cover the different solutions working to scale the top two cryptocurrencies, namely Bitcoin's Lightning Network and Ethereum's Raiden Network. Also, today is my 1-month/31-day Steemit birthday πŸŽ‚, so all of the first 31 comments posted below will earn an upvote from me. Though it's just one cent, it's my way of saying "thanks" to all of my followers and readers. Let's get started!

# Bitcoin Lightning Network
<center>![1-ipqdJgFUJb2Gs16XtWNvYw copy.jpg](https://steemitimages.com/DQmRAny9QPrYYCbEz8KK4iy7dqGKofNoQwv6EEgK5fhgTuN/1-ipqdJgFUJb2Gs16XtWNvYw%20copy.jpg)</center>
### What's the Lightning Network, and what does it do?
The Lightning Network is a way to scale Bitcoin further, causing **huge** improvements in Bitcoin. The main idea of the Lightning Network is to rely on the blockchain _only when necessary_; it allows for payment "channels" to be established between users that allow the users to send payments to each other without using the blockchain.

The blockchain is only used for setting up and closing the payment channel, so all of the caveats that come with blockchain usage are minimized. The Lightning Network greatly improves these essential areas:
* **Scalability** - The Lightning Network increases the number of transactions per second Bitcoin is capable of to potentially _billions_. 
* **Speed** - Rather than relying on blockchain confirmation time which may take some time, Lightning Network transactions confirm in seconds to milliseconds, because they don't rely on the blockchain or on miners.
* **Minimal Fees** Because the Lightning Network rarely communicates with the blockchain, fees are unbelievably low, yet the transactions are still secure and trustless as with the blockchain.

Lightning Network transactions can be represented as "IOU" (I owe you) letters that state that Alice owes Bob 2 BTC. Any IOU can be "given to the blockchain" by either Alice or Bob, though that would incur small fees and waiting times. Now, Bob went out to dinner and Alice payed 3 BTC for the both of them, so Bob updates the Alice-Bob IOU to say "Bob owes Alice 1 BTC." Alice doesn't trust Bob anymore and doesn't want to do business with him, so Alice takes the IOU and gives it to the blockchain, making it official.

### How can it do that?
As explained above, the Lightning Network takes most transactions off the blockchain into "payment channels." But what are these, and how do they work?

It's not that simple, but it's not too complicated either. Here's how the payment channels work: 
* The two users on the payment channel make a ledger entry into the blockchain requiring both participants' signatures to sign off on fund transfers. Both of them create transactions refunding that entry to the individuals in the proper amounts, but those transactions **don't get broadcasted to the blockchain** and stay in the two-person or two-entity channel.
* The two parties can easily update their personal allocations for the entry by creating transactions spending from that output, and as before, these transactions stay away from the blockchain. Using **Blockchain Smart Contracts**, only the most recent transaction is valid and the others are not.
* If one of the parties decides to close the channel, they can easily broadcast the most recent channel version to the blockchain, requiring no trust between parties.

But what if Charles wants to send money to Dean, yet they don't have a payment channel set up? Additionally, this is going to be a one-time or low-frequency transaction, and Charles doesn't want to set up a payment channel with Dean. How does this work?
* These two-entity payment channels can be connected together to form an entire graph or **network**. This means that any node on the network can send money to another node if there is a path through the payment channels to transfer transactions.
* The nodes along the path aren't trusted with transactional data utilizing a script ensuring that either the whole payment fails or succeeds.

The Lightning Network is very powerful and many believe it's the future to scaling Bitcoin. The official paper details that if all Bitcoin users hold at least one payment channel open and that the nodes are interconnected, a **near-infinite** number of transactions can occur on the network. The Lightning Network is being built and finalized right now, and is already available on Litecoin (LTC), as users are hoping it comes to BTC soon.

# Ethereum Raiden Network
<center>![Raiden_network_1080_web copy.jpg](https://steemitimages.com/DQmaHrcQ4qna2UEitzviXR9u9mQ8VheJwzErFxoUz2kWq4H/Raiden_network_1080_web%20copy.jpg)</center>
The Ethereum Raiden Network is a scaling solution incredibly similar to the Bitcoin Lightning Network; in fact, the main concept of two-way state channels exists in the Raiden Network as well.

However, the main difference between the two is usage: Bitcoin's Lightning Network is built to be used only on payment transfers. After all, Bitcoin is a cryptocurrency for **payment** and **fund transfer**. Ethereum, however, has a variety of other uses from tokens to smart contracts. On the Raiden Network, ERC-20 tokens can also be transferred along with ETH. 

Additionally, many decentralized applications can run on the speed and scalability of the Raiden Network. For example, a decentralized payment appreciation service. Think of dTube, Steem's decentralized video service, yet instead of creators being paid only when the user chooses to upvote them, they get paid constantly for every second watched. This can set things up to compete better with Youtube, where creators are paid for every _ad_ watched, yet get rid of all of the paywalls and ads in the process.

Also, the Raiden network can be used to promote fast DEXs (decentralized exchanges). It seems very useful for the IoT (Internet of Things), where small bits of bandwidth, storage, or processing power can be traded at super-fast speeds. Just like the Lightning Network, Raiden allows for fast, low-fee, scalable, trustless transactions, yet adds in all of the "ethereum" bits like Decentralized Apps and Smart Contracts.

In the end, both of these solutions are amazing works of technology that could allow for cryptocurrencies like these two to be scaled for widespread usage, alleviating many of the caveats of both.

Thanks for reading,
β€” @mooncryption

**image sources:** 1 - [medium](https://medium.com/@AudunGulbrands1/lightning-faq-67bd2b957d70), 2 - [coinjoker](https://www.coinjoker.com/raiden-explained/)
**knowledge sources:** 1 - [lightning.network](http://lightning.network), 2 - [raiden.network](http://raiden.network)
**appreciation:** Thanks for reading my post(s). To thank you for being such a wonderful follower/supporter/reader, simply comment below sharing your thoughts on these networks. I'll upvote the first 30 comments over the next few days as my way of saying "thanks."
πŸ‘  , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , and 331 others
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@arcange ·
Congratulations @mooncryption!
Your post was mentioned in the [hit parade](https://steemit.com/hit-parade/@arcange/daily-hit-parade-for-newcomers-20170910) in the following category:

* Upvotes - Ranked 3 with 370 upvotes
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@blockbasis ·
Nice and detailed overview of the [Lightning](https://blockbasis.com/help/digital-currency/what-is-the-lightning-network/) and [Raiden](https://blockbasis.com/help/blockchain/what-is-the-raiden-network/) network. Both networks are built to strongly leverage their underlying blockchains and cryptocurrencies. Just like the [lightning network could save Bitcoin](https://blockbasis.com/help/discussion/will-lightning-network-save-bitcoin/), Raiden will help Ethereum scale. Besides Ethereum and Bitcoin, the two most widely used blockchains, the third major player is Grahpene created by Dan Larimer and runs services like Bitshares, Steemit and soon EOS. [Blockbasis](https://blockbasis.com/) is also based on the Graphene blockchain, which does has built in scalability features already.
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@booster ·
<p>This post has received a 0.90 % upvote from @booster thanks to: @mooncryption.</p>
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@coinsity ·
$0.55
I explained how to make money with Lightning Network nodes, in this article.
https://steemit.com/lightning/@coinsity/a-guide-to-make-money-with-bitcoin-lightning-network-nodes
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@d4amenace ·
https://steemit.com/bitcoin/@d4amenace/quick-install-of-full-bitcoin-mainnet-eclair-lightning-network-node-on-pc-and-smartphone
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@dineroconopcion ·
Este Post ha recibido un Upvote desde la cuenta del King: @dineroconopcion, El cual es un Grupo de Soporte mantenido por 5 personas mas que quieren ayudarte a llegar hacer un Top Autor En Steemit sin tener que invertir en Steem Power. Te Gustaria Ser Parte De Este Projecto?

This Post has been Upvote from the King's Account: @dineroconopcion, It's a Support Group by 5 other people that want to help you be a Top Steemit Author without having to invest into Steem Power. Would You Like To Be Part of this Project?
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@traderdad ·
yes.. sorry I missed this question earlier..
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@harpooninvestor ·
more reading about the Raiden Network here, by a seasoned stock analyst pro...

https://steemit.com/cryptocurrency/@harpooninvestor/hot-crypto-of-2018-the-raiden-network
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@lukestokes ·
You've got a lot of great content! Well done on this post and others. Followed.
πŸ‘  
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@mooncryption · (edited)
Thank you so much! I just saw your own blog, and I love that we both share an interest for cryptos. Following you as well :)

Appreciate your support; it means a lot to a minnow like me!

(edit) Just saw you're running a witness node; voting for you as well.
πŸ‘  
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@meganho ·
Very nice one, I like it. :)
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@minnowpond1 ·
This post recieved an upvote from minnowpond. If you would like to recieve upvotes from minnowpond on all your posts, simply FOLLOW @minnowpond
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@resteem.bot ·
<a href="https://steemit.com/deutsch/@resteem.bot/this-bot-resteem-your-posting-version-1-0-apple-dont-t-forget-the-point"><img src="https://steemitimages.com/DQmdKQnXCgKtC3qtJwBivYTUVuv44sGXQt9BGxRbZub4V4y/Resteem%20Bot2.png" alt="@resteem.bot" /></a>
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@resteembot ·
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@sambor ·
Thanks for the overview mooncryption. Just upvoted and followed you and hope to read more interesting stuff from you soon.

It’s more than 30 days, but I’m new here too, so wouldn’t mind an upvote as well. Keep steeminβ€˜! :)
πŸ‘  
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@screenname ·
Re: Scaling Cryptos: Bitcoin Lightning Network vs Ethereum Raiden Network
<p>This post has been ranked within the top 10 most undervalued posts in the second half of Sep 10. We estimate that this post is undervalued by $32.01 as compared to a scenario in which every voter had an equal say.</p> 
<p>See the full rankings and details in <a href="https://steemit.com/curation/@screenname/the-daily-tribune-most-undervalued-posts-of-sep-10---part-ii">The Daily Tribune: Sep 10 - Part II</a>. You can also read about some of our methodology, data analysis and technical details in <a href="https://steemit.com/curation/@screenname/introducing-the-daily-tribune-most-undervalued-posts-of-nov-04---part-i">our initial post</a>.</p>
<p>If you are the author and would prefer not to receive these comments, simply reply "Stop" to this comment.</p>
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@traderdad ·
$0.02
mooncryption, thanks for laying the difference between the two coins. For now, I am currently hold Bitcoin, Etherium and Litecoin. Is there another coin or solution for increase performance that we should invest in. For example, EOS seems to be the dark horse for high performance blockchain. Your thoughts please. Following, upvoted and resteemed
πŸ‘  , ,
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@mooncryption ·
Hi,
You're right, EOS is a great coin to invest in (especially because it's so cheap right now), given the people behind it and the performance it continues to show. I am currently invested in Bitcoin, Ethereum, Litecoin, Monero, EOS, Bitshares, and Steem in different quantitiesβ€”  I think EOS and Steem have a lot of potential to grow, so I invest a lot in those two. Monero is also pretty interesting as it's my favorite privacy-centered cryptocurrency, with untraceable private transactions. Privacy cryptos like Dash and Monero have seen recent increases as well.

Thanks for the question :)
πŸ‘  
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@traderdad ·
Thanks. I will check out monero and dash
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@sambor ·
$0.06
Hello traderdad, additionally you could take a look at projects like Iota, Cardano, Substratum, Mysterium, Lisk, Basic Attention Token, Stellar Lumens, Nem, MaidSafe, Civic, ChainLink, Quantstamp, Loopring, Aeon, Vertcoin, Navcoin, OmiseGO, TenX, Metal... to name a few good ones, and I think that in the Medical and Recreational Marijuana industry, Paragon and GreenMed will rise soon, and that’s a huge market. Have fun investing and good luck!
πŸ‘  ,
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@traderdad ·
Sambor,  Thanks for the list. Right now using the Nicehash application to mine the best coin of the day. The results gets deposited into a wallet in Bitcoin or Etherium. Upvoted and following.
πŸ‘  
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