Bitcoin: The Undisputed Heavyweight Champ
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Could Bitcoin retain its position as the most valuable and widely used cryptocurrency in 2018? Some of the foremost crypto analysts in the world are shouting yes, predicting an impending bullish run all the way up to $50,000 with a total market cap of over $1 trillion.
A steep price rise would be welcomed by tech security magnate and blockchain cowboy (and bad boy) John McAfee, who has predicted a sharp run up to $500,000 per coin by 2020 with extreme confidence. More serious predictions of the future price of Bitcoin take into account the impending launch of the Lightning Network, which appears to be a viable solution to the scalability issue.
The Bitcoin blockchain is currently slow and cumbersome due to the proof of work consensus mechanism it uses, which requires all ledger changes to be shared with all network participants in order to be verified. The Lightning Network solution proposes creating “payment channels” that connect network participants directly to each other, creating transactions that aren’t immediately committed to the blockchain.
Instead, these transactions are recorded by the Lightning Network without finalizing them. Later, the Lightning Network then closes the balances of the channel as a normal transaction on the Bitcoin blockchain. This process dramatically reduces the total amount of messages that need to be sent on the Bitcoin Mainnet.
An elegant element of the Lightning Network solution is that payment channels are linked together. When payment channels are created between network participants, other transactions can be routed through them as well. This creates an extremely fast transaction processing system that can potentially process millions to billions of transactions per second.
This high transactional efficiency also makes transaction fees extremely low. Lightning Network transactions are now being used on the Bitcoin mainnet, with cryptocurrency mobile top-up platform Bitrefill performing a real-world Lightning Network transaction in December 2017. Coinfinity, an Austrian cryptocurrency startup, performed the world’s first Lightning Network transaction through a Bitcoin ATM in February this year.
With the Lightning Network currently operating on a separate testnet and a rollout of the scalability layer just around the corner, Bitcoin appears to be about to blow the competition away in terms of sheer transaction speed, at least in the near term… but will the platform-based Distributed Applications and Smart Economy Apps that run on Ethereum and NEO create a large enough ecosystem to have more value in their own right?