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Speed of Lightning, Roar of Thunder: Blockchain Unveils Off-Chain Bitcoin Payments Network

Blockchain_Thunder_homepage_May2016

With the alpha release of its Thunder Network, FinDEVr alum Blockchain has produced what it calls “the first usable implementation of the Lightning network for off-chain bitcoin payments that settles back to the main bitcoin blockchain.” So what does this mean for developers and payment tech professionals?

Blockchain_PeterSmith_CEOUntil recently, the idea of lightning networks has been just that: a concept that thrived in research labs and test nets. Blockchain’s interest is based in the company’s goal of using smart contracts to develop “super-charged payment networks” and Thunder represents the first concrete, albeit still in alpha, step in this direction. Blockchain CEO Peter Smith (pictured) said of the technology, “it has the ability to unleash the power of micro transactions, to allow the bitcoin network to handle heavy loads, and to increase user privacy.”

In a profile for Forbes, Smith compared the technology to a cash poker game in which a number of transactions take place with poker chips before all players cash out at the night. “It will enable people to make instantaneous transactions at an even lower cost,” Smith explained. He sees the Thunder network as reaching “near-Visa scale” and anticipates being able to execute transactions “somewhere in the region of a hundredth to a thousandth of a penny.”

Read about Blockchain’s internal testing of Thunder, including “Transaction Zero.” Smith and colleague Mats Jerratsch funded Thunder Wallets from their personal Blockchain wallets, then made a number of free bitcoin transactions via a payment channel created on an independent node. Finally, they closed the channel and transferred the money back to their original Blockchain wallets.

Blockchain_Thunder_network_test

“Safely back on the main chain!” Smith wrote. “This is a big deal and we’re excited about the work ahead.”

A quick summary of the features of the Thunder Network are:

  • node and wallet with GUI
  • settle to bitcoin blockchain
  • cheap payments (“fundamentally lower than on-chain payments”)
  • AES-CTR encryption
  • open and close payment channels at will
  • payment relay with encrypted routing
  • automatic payment settlement
  • instant irrevocable payments

Founded in 2011 and headquartered in Luxembourg, Blockchain participated in the inaugural FinDEVr developers conference in San Francisco in 2014. The company has raised $30 million in funding and includes Lightspeed Venture Partners, Mosaic Ventures, and Richard Branson among its investors.


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