Lyn Alden is a macroeconomist and investment strategist. In this interview, we discuss her latest paper on the Lightning Network (LN). We focus on the importance of Bitcoin’s base layer, how LN compares to Visa and Mastercard, and how LN is connecting the world in new and revolutionary ways.
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To understand the Lightning Network, you need to go back and understand money: what attributes does it need to have, and what are the best means of facilitating these attributes?
Bitcoiners believe it to be the latest evolution in money. It has the best combination of features of any previous version of money: it is hard, auditable, portable, uncensorable, immutable, fungible, trustless and decentralised. Yet, Bitcoin’s Achilles’ heel, and the question that plagued its first decade, was how it could scale to become an effective medium of exchange.
The capacity of the Bitcoin network is purposefully limited to ensure that the network can remain as decentralised as possible. For Bitcoin to operate as a medium of exchange, a transactional layer needed to be built on top of the network.
This is the Lightning Network. It’s designed to provide an instant and cheap payment system connecting the world.