It looks like Apple and Facebook are at war over Facebook’s anti-privacy “engagement” business model:
- Apple is introducing privacy controls to iOS14 which allow users to control who tracks them
- Facebook took out newspaper ads attacking Apple for potentially harming its “targeted” advertising model.
Tim Cook’s Speech:
In a recent speech at Brussels’ International Data Privacy Day, Apple CEO Tim Cook went on the offensive against Mark Zuckerberg and Facebook. Cook’s speech seems to be a direct response to Facebook’s recent attack on Apple, in which the world’s largest social network took out full-page ads in several newspapers attacking Apple’s new privacy changes.
Technology does not need vast troves of personal data stitched together across dozens of websites and apps in order to succeed. Advertising existed and thrived for decades without it, and we’re here today because the path of least resistance is rarely the path of wisdom.
If a business is built on misleading users on data exploitation, on choices that are no choices at all, then it does not deserve our praise. It deserves reform.
We should not look away from the bigger picture and a moment of rampant disinformation and conspiracy theory is juiced by algorithms. We can no longer turn a blind eye to a theory of technology that says all engagement is good engagement, the longer the better, and all with the goal of collecting as much data as possible.
Too many are still asking the question, ‘How much can we get away with?’ When they need to be asking, ‘What are the consequences?’
What are the consequences of prioritizing conspiracy theories and violent incitement simply because of the high rates of engagement?
What are the consequences of not just tolerating but rewarding content that undermines public trust in life-saving vaccinations?
What are the consequences of seeing thousands of users joining extremist groups and then perpetuating an algorithm that recommends even more?
It is long past time to stop pretending that this approach doesn’t come with a cause. A polarization of lost trust, and yes, of violence.
A social dilemma cannot be allowed to become a social catastrophe.
How the Trump Campaign’s Mobile App Is Collecting Massive Amounts of Voter Data
Since the Trump campaign set up a shell company called American Made Media Consultants, in 2018, an entity it describes as a “vendor responsible for arranging and executing media buys and related services at fair market value,” it’s been nearly impossible to know whom the campaign is paying, for what, and how much. But, on May 27th, Alan Knitowski, the C.E.O. of Phunware, an Austin-based ad broker and software company, announced a “strategic relationship with American Made Media Consultants on the development, launch and ongoing management and evolution of the Trump-Pence 2020 Reelection Campaign’s mobile application portfolio.” Although Phunware never showed up in the campaign’s F.E.C. reports, Phunware’s S.E.C. filings show that, since last year, it has been paid around four million dollars by A.M.M.C.
On its face, Phunware seems like a strange choice to develop the campaign’s app. Before working for President Trump, Phunware’s software was being used in relatively few applications, the most popular being a horoscope app. And, since 2019, it has been embroiled in a lawsuit with Uber, a former client of the company’s ad-placement business. The dispute stems from a yearlong investigation by two former Phunware employees who discovered that the company was pretending to place Uber ads on Web sites like CNN when, in fact, they were appearing on pornography sites, among others, if they appeared at all. But, according to former Phunware employees and business associates, the company’s value to the Trump campaign is not in software development. “The Trump campaign is not paying Phunware four million dollars for an app,” a former business partner of the company told me. “They are paying for data. They are paying for targeted advertising services. Imagine if every time I open my phone I see a campaign message that Joe Biden’s America means we’re going to have war in the streets. That’s the service the Trump campaign and Brad Parscale”—the Trump campaign’s senior adviser for data and digital operations—“have bought from Phunware. An app is just part of the package.”
The Trump 2020 app is a massive data-collection tool in its own right. When it launched, on April 23rd, Parscale, who was then Trump’s campaign manager, urged his followers on Facebook to “download the groundbreaking Official Trump 2020 App—unlike other lame political apps you’ve seen.” Despite the hype, the 2020 app recapitulates many of the functions found on the 2016 app. There’s a news feed with Trump’s social-media posts, an events calendar, and recorded videos. The “gaming” features that distinguished the 2016 app are still prominent—a “Trump’s army” member who accumulates a hundred thousand points by sharing contacts or raising money is promised a photograph with the President, while other members can use points to get discounts on maga gear. Users are prompted to invite friends to download the app—more points!—and can use the app to sign up to make calls on behalf of the campaign, to be a poll watcher, to register voters, and to get tickets to virtual and in-person events.
The most obvious new feature on the 2020 app is a live news broadcast, carefully curated by the campaign to push the President’s talking points. It is hosted by a cast of campaign surrogates, including Lara Trump, Eric Trump’s wife, and Kimberly Guilfoyle, Donald Trump, Jr.,’s girlfriend and the campaign’s national finance chair. There are also channels aimed at particular demographic groups, among them Women for Trump, Black Voices for Trump, and Latinos for Trump. Though it is a crude approximation of a traditional news outlet, the Trump app enables users to stay fully sequestered within the fact-optional Trump universe. “I think everything we do is to counter the media,” Parscale told Reuters in June. “This is another tool in the tool shed to fight that fight, and it’s a big tool.” In May, after Twitter labelled one of Trump’s tweets as being in violation of its standards, sparking renewed claims of liberal-media censorship of conservatives (despite the fact that the tweet was not taken down), downloads of the campaign app soared.
To access the Trump app, users must share their cell-phone numbers with the campaign. “The most important, golden thing in politics is a cellphone number,” Parscale told Reuters. “When we receive cellphone numbers, it really allows us to identify them across the databases. Who are they, voting history, everything.” Michael Marinaccio, the chief operating officer of Data Trust, a private Republican data company, said recently that “what’s new this year, or at least a sense of urgency, is getting as many cell-phone numbers as we can in the voter file data.” An effective way to do that is to entice supporters to share not only their own cell-phone numbers with the campaign but those of their contacts as well. One estimate, by Eliran Sapir, the C.E.O. of Apptopia, a mobile-analytics company, is that 1.4 million app downloads could provide upward of a hundred million phone numbers. This will enable the Trump campaign to find and target people who have not consented to handing over their personal information. It’s not unlike how Cambridge Analytica was able to harvest the data of nearly ninety million unsuspecting Facebook users, only this time it is one’s friends, family, and acquaintances who are willfully handing over the data for a chance to get a twenty-five-dollar discount on a maga hat.
By contrast, the new Biden app still collects data on users, but it outlines the specific uses of that data and doesn’t automatically collect the e-mail and phone numbers of users’ friends and family. “Unlike the Biden app, which seeks to provide users with awareness and control of the specific uses of their data, the Trump app collects as much as it can using an opt-out system and makes no promises as to the specific uses of that data,” Samuel Woolley, the director of the propaganda research project at the University of Texas’s Center for Media Engagement, told me. “They just try to get people to turn over as much as possible.”
A Trump spokesperson told me, “The Trump 2020 app was built by Phunware as a one-stop destination with a variety of tools to get voters engaged with President Trump’s reëlection campaign.” Among its main contributions to the app’s data-mining capabilities is a “location experience kit,” which the company had previously marketed to hospitals and malls to help people navigate unfamiliar buildings. Visitors could pair their phone’s Bluetooth with beacons set up throughout the facility. Initially, the Trump 2020 app was built around big rallies, where this feature would have been useful. According to one former employee, however, the company’s location software, which functions even when the app is not open, may be capable of sucking up more than geographic coördinates. It could potentially “sniff out all of the information you have on your phone. Any sort of registration data, your name, your phone number, potentially your Social Security number, and other pieces of data. It could sniff out how many apps you have on your phone, what type of apps you have on your phone, what apps you deleted recently, how much time you’ve spent in an app, and your dwell time at various specific locations. It could give a very intimate picture of that individual and their relationship with that mobile device.” (Phunware did not respond to multiple requests for comment.)
In 2017, as Phunware was moving into the election space, the company’s Web site announced, “As soon as the first few campaigns recognize the value of mobile ad targeting for voter engagement, the floodgates will open. Which campaign will get there first and strike it rich?” A year later, according to people familiar with the effort, the company used its location-tracking capabilities to create a lobbying campaign on behalf of a health-care company aiming to influence legislators in Georgia. It put a “geofence” around the governor’s mansion that recorded the I.D. of every device that went in and out of the building, and then used the I.D.s to send targeted messages to those phones (likely including the governor’s) about the legislation it was aiming to influence. The legislation passed. Phunware’s leadership has also discussed their ability to geofence polling places, according to people who were present during these discussions, in order to send targeted campaign ads to voters as they step into the voting booth. While it is illegal to advertise in the vicinity of the polls, using location data in this way to send targeted ads could enable a campaign to breach that border surreptitiously.
Phunware’s data collection on behalf of the Trump campaign likely extends beyond the app as well. According to Phunware’s chief operating officer, Randall Crowder, the company has created a “data exchange” that “enables digital marketers to design custom audiences within minutes using geographic, interest, intent, and demographic segments . . . high-quality G.P.S. location data points from one hundred million-plus devices in the United States to increase scale of location-based audiences.” In its promotional materials, the company also claims to have unique device I.D.s for more than a billion mobile devices worldwide, and to have developed what it calls a Knowledge Graph—a “consumer-centric collection of actions, preferences, characteristics and predicted behavior” from the data it has siphoned from mobile phones and tablets. Much like Facebook’s social graph, which has been described as “the global mapping of everybody and how they’re related,” this enables the company to quickly sort through large data sets, uncovering connections and relations that otherwise would be obscured. For example: middle-aged women who live alone, rarely vote, own guns, and live in a border state.
So how did Phunware obtain a billion unique device I.D.s? As the company described it to the S.E.C., they were collected from phones and tablets that use Phunware’s software. But, according to people who have worked with the company, in addition to the data it obtains through its software, Phunware has been using its ad-placement business as a wholesale data-mining operation. When it bids to place an ad in an app like, for example, Pandora, it scoops up the I.D. of every phone and tablet that would have been exposed to the ad, even if it loses the bid. By collecting and storing this information, the company is able to compile a fairly comprehensive picture of every app downloaded on those devices, and any registration data a user has shared in order to use the app.
This information can yield rich demographic data. If a campaign is looking for young men with an affinity for guns, for instance, it might look at who has downloaded both Call of Duty and CCW, the Concealed Carry Fifty State app. Then, using the location data associated with the device I.D., the data can be unmasked and linked to an individual. Once a campaign knows who someone is, and where a person lives, it is not difficult to start building a voter file, and using this information to tailor ads and messages.
Tom Wheeler, the former chair of the Federal Communications Commission, told me, “These are Cambridge Analytica-like techniques. It’s collecting the descriptive power of data from multiple sources, most of which the consumer doesn’t even know are being collected. And that’s what Cambridge Analytica did.”
In late July, a group of lawmakers, led by Senator Bill Cassidy, Republican of Louisiana, and his Democratic colleague Ron Wyden, of Oregon, sent a letter to the chair of the Federal Trade Commission asking him to investigate whether using bidding information in this way constitutes an unfair and deceptive practice. “Few Americans realize that companies are siphoning off and sharing that ‘bidstream’ data to compile exhaustive dossiers about them,” they wrote, “which are then sold to hedge funds, political campaigns, and even to the government without court orders.” According to Charles Manning, the C.E.O. of Kochava, a data marketplace, “There are no regulatory bodies that appear to be aware of the technological foundations upon which digital advertising operates. This is a challenge, because without understanding how programmatic ads are bought and sold, regulators face an uphill battle in applying regulation that deals with opaque supply chains where fraudulent behavior can flourish.”
The Trump app, at least, is explicit about what it expects from its users: “You may be asked to provide certain information, including your name, username, password, e-mail, date of birth, gender, address, employment information, and other descriptive information,” the app’s privacy policy states. “The Services [of the app] may include features that rely on the use of information stored on, or made available through, your mobile Device. . . . We . . . reserve the right to store any information about the people you contact via the Services. . . . We reserve the right to use, share, exchange and/or disclose to DJTFP affiliated committee and third parties any of your information for any lawful purpose.” (When I asked Woolley why the campaign was asking supporters to share their contacts, since it already had access to them through the app’s permissions, he pointed out that, when a user shares their contacts to earn points, “that actually sends out messages to your contacts asking them to download the app. So rather than just getting data on your friends and family, they are able to also reach out to them using you as a reference.”)
The policy also notes that the campaign will be collecting information gleaned from G.P.S. and other location services, and that users will be tracked as they move around the Internet. Users also agree to give the campaign access to the phone’s Bluetooth connection, calendar, storage, and microphone, as well as permission to read the contents of their memory card, modify or delete the contents of the card, view the phone status and identity, view its Wi-Fi connections, and prevent the phone from going to sleep. These permissions give the Trump data operation access to the intimate details of users’ lives, the ability to listen in on those lives, and to follow users everywhere they go. It’s a colossal—and essentially free—data-mining enterprise. As Woolley and his colleague Jacob Gursky wrote in MIT Technology Review, the Trump 2020 app is “a voter surveillance tool of extraordinary power.”
I learned this firsthand after downloading the Trump 2020 app on a burner phone I bought in order to examine it, using an alias and a new e-mail address. Two days later, the President sent me a note, thanking me for joining his team. Lara Trump invited me (for a small donation) to become a Presidential adviser. Eric Trump called me one of his father’s “FIERCEST supporters from the beginning.” But the messages I began getting from the Trump campaign every couple of hours were sent not only to the name and address I’d used to access the app. They were also sent to the e-mail address and name associated with the credit card I’d used to buy the phone and its sim card, neither of which I had shared with the campaign. Despite my best efforts, they knew who I was and where to reach me.
Full Interview: Edward Snowden On Trump, Privacy, And Threats To Democracy | The 11th Hour | MSNBC
On the eve of his memoir ‘Permanent Record’ being published, NSA whistleblower Edward Snowden talked at length from Moscow with MSNBC’s Brian Williams in an exclusive interview. This is their discussion in its entirety, edited down slightly for clarity.
What Is Lightning Network And How It Works
When Bitcoin was first proposed by Satoshi Nakamoto in 2008, the very first public comment on the system made by James A. Donald contained the following line: “the way I understand your proposal, it does not seem to scale to the required size”. Ten years later, scalability is still the biggest problem for Bitcoin as well as other veteran cryptocurrency systems.
What exactly does scalability mean? Well, throughout its existence Bitcoin has only been capable of processing around 7 transactions per second. While this was enough at the very beginning, the system has been congested for a few years now. As a result, transactions take a long time to process and transaction fees are extortionate.
If Bitcoin is ever to become a fully-fledged alternative to currently existing payment systems, it will obviously need to be able to compete with them. As of now, it’s not even close. To understand the magnitude of the situation, simply compare Bitcoin’s minuscule 7 transactions per second to Visa’s average of 24,000, and its peak capacity of around 50,000 transactions per second.
Over the years, Bitcoin’s community came up with various proposals on how to improve Bitcoin’s scalability, but an overall resounding consensus is yet to be reached. That’s why we currently have several Bitcoin-like networks branching out from the original one. There is, however, one proposed solution currently being tested that might just work. It’s called the Lightning Network.
What is the Lightning Network?
At some point in history, sending a telegram was the quickest and most efficient way of long-distance communication. To do so, you had to go to your local post office, fill in a form and pay for your message based on how many letters it contained. Then, the message would get telegraphed to the nearest telegraph office for transmission to the distant end. A postman would then deliver the telegram to its destination.
Basically, there were a lot of people involved in sending a simple short message and you had to pay quite a bit of money for it. That’s pretty much the current state of the Bitcoin network. In this analogy, the Lightning Network is essentially like having a person you want to talk to on speed-dial: you just need to press ‘1’ and your friend’s phone is already ringing.
To put it simply, the idea behind the Bitcoin Lightning Network might’ve sounded something like this: we really don’t need to keep a record of every single transaction on the blockchain.
Instead, the Lightning Network adds another layer to Bitcoin’s blockchain and enables users to create payment channels between any two parties on that extra layer. These channels can exist for as long as required, and because they’re set up between two people, transactions will be almost instant and the fees will be extremely low or even non-existent.
How does it work?
Enter Danny and Jon. They may be working together, they might be relatives or a couple, the point is they need to send money to each other rather often, quickly and with minimal fees. Thus, they set up a channel on the Lightning Network.
Firstly, they need to create a mulitisignature wallet, which is a wallet that they can both access with their respective private keys. Then, they both deposit a certain amount of Bitcoin – say, 3 BTC each – into that wallet.
From then on, they can perform unlimited transactions between the two of them. Essentially, these transactions are redistributions of the funds stored in the shared wallet. For instance, if Danny wants to send 1 BTC to Jon, she will need to transfer the ownership right of that amount to him. Then, the two of them use their private keys to sign for an updated balance sheet.
The actual distribution of funds happens when the channel gets closed. The algorithm uses the most recently signed balance sheet to determine who gets what. If Danny and Jon would decided to close the channel after that one transaction, Danny will get 2 BTC and Jon will receive 4 BTC.
Only after the channel is closed, the information about it’s initial and final balance is broadcasted to the Bitcoin blockchain. So, the way the Lightning Network works is it enables users to conduct numerous transactions outside of the main blockchain and then record them as a single one.
The most exciting thing here is that once the technology is widely adopted, you won’t necessarily even need to set up a dedicated channel to send funds to a certain person. Instead, you will be able to send payment to someone using channels with people that you are already connected with. The system will automatically find the shortest route.
This is how the Lightning Network might eventually provide an answer to the never-ending debate about buying a cup of coffee for Bitcoins. By the looks of it, doing so through the network of Lightning channels may just work, as it will be an almost instance purchase that won’t incur any fees.
Security. However, it is worth noting that the concept of the Lightning Network means that the system will work on top of the blockchain, but won’t actually have its security behind itself. Thus, it’s very likely that it will be mostly used for small or even relatively microscopic transactions. Larger transfers that require decentralized security will most likely still be done on the original layer.
Finally, another fascinating feature of the Lightning Network being tested at the moment is cross-chain atomic swaps, which are transfers of tokens between different blockchains. Simply put, it’s a way of swapping any given cryptocurrency to a different one without using cryptocurrency exchanges.
Ultimately, this technology might make unsafe centralized cryptocurrency exchanges as well as the hassle associated with trading on them obsolete. The first test of exchanging tokens between the Bitcoin and Litecoin test blockchains has already proved to be a success.
Who developed it?
Lightning Network was first described in a white paper by Joseph Poon and Thaddeus Dryja in 2015 – the current version of the white paper can be found here. There are currently three teams collectively carrying out most of the work on the development of the Lightning Network: Blockstream, Lightning Labs and ACINQ, with input from other members of the Bitcoin community.
Each of the startups mentioned above is working of their own implementation of the Lightning Network Protocol written in different programming languages.
Blockstream works on LN version in C.
Lightning Labs is developing a Lightning Network Daemon (lnd) written in Golang.
ACINQ is responsible for a Scala implementation.
Moreover, there are other implementations currently in development. The full list is available here. Finally, it is important to mention that the recent tests have proven that the three major implementations are fully interoperable, which means they can seamlessly work with one another.
Where, when and why will it be used?
It seems that the cryptocurrency community is eagerly anticipating the launch of the Lightning Network.
Over the years, Bitcoin’s community came up with various proposals on how to improve Bitcoin’s scalability, but an overall resounding consensus is yet to be reached. That’s why we currently have several Bitcoin-like networks branching out from the original one. There is, however, one proposed solution currently being tested that might just work. It’s called the Lightning Network.
What is the Lightning Network?
At some point in history, sending a telegram was the quickest and most efficient way of long-distance communication. To do so, you had to go to your local post office, fill in a form and pay for your message based on how many letters it contained. Then, the message would get telegraphed to the nearest telegraph office for transmission to the distant end. A postman would then deliver the telegram to its destination.
Basically, there were a lot of people involved in sending a simple short message and you had to pay quite a bit of money for it. That’s pretty much the current state of the Bitcoin network. In this analogy, the Lightning Network is essentially like having a person you want to talk to on speed-dial: you just need to press ‘1’ and your friend’s phone is already ringing.
To put it simply, the idea behind the Bitcoin Lightning Network might’ve sounded something like this: we really don’t need to keep a record of every single transaction on the blockchain.
Instead, the Lightning Network adds another layer to Bitcoin’s blockchain and enables users to create payment channels between any two parties on that extra layer. These channels can exist for as long as required, and because they’re set up between two people, transactions will be almost instant and the fees will be extremely low or even non-existent.
How does it work?
Enter Danny and Jon. They may be working together, they might be relatives or a couple, the point is they need to send money to each other rather often, quickly and with minimal fees. Thus, they set up a channel on the Lightning Network.
Firstly, they need to create a mulitisignature wallet, which is a wallet that they can both access with their respective private keys. Then, they both deposit a certain amount of Bitcoin – say, 3 BTC each – into that wallet.
From then on, they can perform unlimited transactions between the two of them. Essentially, these transactions are redistributions of the funds stored in the shared wallet. For instance, if Danny wants to send 1 BTC to Jon, she will need to transfer the ownership right of that amount to him. Then, the two of them use their private keys to sign for an updated balance sheet.
The actual distribution of funds happens when the channel gets closed. The algorithm uses the most recently signed balance sheet to determine who gets what. If Danny and Jon would decided to close the channel after that one transaction, Danny will get 2 BTC and Jon will receive 4 BTC.
Only after the channel is closed, the information about it’s initial and final balance is broadcasted to the Bitcoin blockchain. So, the way the Lightning Network works is it enables users to conduct numerous transactions outside of the main blockchain and then record them as a single one.
The most exciting thing here is that once the technology is widely adopted, you won’t necessarily even need to set up a dedicated channel to send funds to a certain person. Instead, you will be able to send payment to someone using channels with people that you are already connected with. The system will automatically find the shortest route.
This is how the Lightning Network might eventually provide an answer to the never-ending debate about buying a cup of coffee for Bitcoins. By the looks of it, doing so through the network of Lightning channels may just work, as it will be an almost instance purchase that won’t incur any fees.
Security. However, it is worth noting that the concept of the Lightning Network means that the system will work on top of the blockchain, but won’t actually have its security behind itself. Thus, it’s very likely that it will be mostly used for small or even relatively microscopic transactions. Larger transfers that require decentralized security will most likely still be done on the original layer.
Finally, another fascinating feature of the Lightning Network being tested at the moment is cross-chain atomic swaps, which are transfers of tokens between different blockchains. Simply put, it’s a way of swapping any given cryptocurrency to a different one without using cryptocurrency exchanges.
Ultimately, this technology might make unsafe centralized cryptocurrency exchanges as well as the hassle associated with trading on them obsolete. The first test of exchanging tokens between the Bitcoin and Litecoin test blockchains has already proved to be a success.
Who developed it?
Lightning Network was first described in a white paper by Joseph Poon and Thaddeus Dryja in 2015 – the current version of the white paper can be found here. There are currently three teams collectively carrying out most of the work on the development of the Lightning Network: Blockstream, Lightning Labs and ACINQ, with input from other members of the Bitcoin community.
Each of the startups mentioned above is working of their own implementation of the Lightning Network Protocol written in different programming languages.
Blockstream works on LN version in C.
Lightning Labs is developing a Lightning Network Daemon (lnd) written in Golang.
ACINQ is responsible for a Scala implementation.
Moreover, there are other implementations currently in development. The full list is available here. Finally, it is important to mention that the recent tests have proven that the three major implementations are fully interoperable, which means they can seamlessly work with one another.
Where, when and why will it be used?
It seems that the cryptocurrency community is eagerly anticipating the launch of the Lightning Network. Originally, it was designed specifically for Bitcoin, but the technology is currently being developed for an array of other cryptocurrencies, such as Stellar, Litecoin, Zcash, Ether and Ripple.
Real Bitcoin has actually already been sent and nearly always received using Blockstream’s, Lightning Labs’ and ACINQ’s implementations, proving that all three of those are interoperable. Moreover, the first version of the lightning specifications outlining the rules of the network has been published.
Those specifications are a huge step forward for the network, as they can be used by developers of applications and the implementation of the Lightning Network in other programming languages.
However, the network is still very much in its infancy. As of yet, there’s no software with which real-life casual users of the network can make transactions. Moreover, the current implementations are still quite buggy. Lightning Network developers have urged users to learn about the network using Bitcoin’s testnet and not send any real money.
The developers are also advising users to stay patient, as the network’s code is very complex and requires rigorous testing. To be fully adopted by the Bitcoin community, the Lightning Network will need to prove itself to be safe and usable. With that and many other factors in mind, experts predict that a fully working Lightning Network can be from several months to a couple of years away.
As to the reason why the network will be used, the answer is simple: scalability. If the network will actually provide a solution to Bitcoin’s main issue, it will most likely be adopted by other cryptocurrencies.
If that happens, there is a possibility of cross-chain atomic swap technology being developed further, thus marking a first step towards building truly decentralized cryptocurrency exchanges.
Pros
As it was mentioned before, the Lightning Network is only making its very first steps. It’s still very much in development, and whether it will actually work as the developers imagine it still remains to be seen. If it does, here are some of the most important advantages of the Lightning Network you can benefit from:
Transaction speed. Once the network is live, you won’t have to wait for several confirmations of every transaction you’re trying to make. The transactions will be almost instantaneous no matter how busy the network is. If this happens, the cryptocurrency market will make huge steps towards being able to compete with traditional payment systems like Visa, MasterCard and PayPal.
Transaction fees. As the transactions will actually take place within the Lightning Network channels and outside of the blockchain, you will only need to pay the tiniest fees, if any at all. This is one of the main advantages of the Lightning Network, as this will fully enable Bitcoin to be used as a form of payment in shops, cafes, bars and so on.
Scalability. The Lightning Network is said to be able to take the transactions per second figure of Bitcoin and other cryptocurrencies to unprecedented heights of at least 1 million transactions per second.
Cross-chain atomic swaps. The first tests of cross-blockchain transactions worked, and this is all very exciting. As long as the two blockchains share the same cryptographic hash function (and most major one do), the users will be able to send money from one chain to another without having to trust a third-party intermediary, such as an exchange. This technology has a truly revolutionary potential.
Security and Anonymity. The vast majority of cryptocurrencies out there are not fully anonymous. The transitions can still be traced from one wallet to another. When it comes to the Lightning Network, though, most of the transactions happen outside of the main blockchain, so all the micropayment made via Lightning channels will be almost impossible to trace.
Cons
Not fully operational. Perhaps the main disadvantage of the Lightning Network at the moment is the fact that’s it’s not fully operational yet, so there’s no way of fully asserting how good it actually is. Moreover, it’s concept looks great on paper, but as of yet it’s impossible to find out whether it’ll look as great once realized.
Complexity of channels. The Lightning Network is conceptualized as sort of a web of channels which, once established, should theoretically allow for seamless transactions. However, there is no telling what will happen if the payment will have to take too convoluted a route. Surely, if your transaction will need to go through dozens of intermediate channels, the fees will add up.
Channel caps. Another drawback of the network is the fact that in its current version the channels are capped. That is, the amount of Bitcoins stored in the wallet by the two users upon establishing a channel is the maximum amount of funds in that channel. This setup creates a situation where some users might need to choose between having liquidity within the Lightning Network channels and having liquidity outside of them, on the main blockchain. This is far from ideal, especially for those with rather limited resources.
Hubs. Moreover, there have been concerns voiced over forming of ‘hubs’ – a sort of nodes with a lot of capital that the majority of transactions will go through. Many Bitcoin enthusiasts see this as further centralization of the network. But, it is unlikely that such hubs will be able to make any significant profit of transactions fees.
Again, it is worth pointing out that at the moment both the advantages and drawbacks of the Lightning Network listed above are very speculative.
Should I use the Lightning Network?
Well, as a matter of fact, if you’re not an advanced user, you can’t use Lightning Network just yet. So, the best – if not the only thing you can do right now is wait and see whether the lightning network lives up to the hype, whether it can actually function and described and whether it’s safe.
Bear in mind, the Lightning Network is not the only scaling proposal out there, and it’s by no means an undisputed leader in that race, with Bitcoin Cash (BCH) being its main rival. The debate between the BCH adepts and the Lightning supporters is fierce and there’s no end in sight. It could be that one of those proposals comes out on top, they could potentially coexist, or there can be an entirely different solution.
The Lightning Network sounds exciting. If it actually delivers, consider what you actually use your Bitcoins for. If you use the tokens as a long-term investment and nothing else, you might not even need the Lightning Network, as currently it doesn’t seem entirely safe to entrust it with handling big transfers.
But, if you view Bitcoin as an alternative form of payment, the Lightning Network, provided it lives up to the expectations, will be essential for you. Instant micropayments, increased anonymity, almost non-existent fees – it really seems to offer solutions to most of the Bitcoin’s problems.
, but the technology is currently being developed for an array of other cryptocurrencies, such as Stellar, Litecoin, Zcash, Ether and Ripple.
Real Bitcoin has actually already been sent and nearly always received using Blockstream’s, Lightning Labs’ and ACINQ’s implementations, proving that all three of those are interoperable. Moreover, the first version of the lightning specifications outlining the rules of the network has been published.
Those specifications are a huge step forward for the network, as they can be used by developers of applications and the implementation of the Lightning Network in other programming languages.
However, the network is still very much in its infancy. As of yet, there’s no software with which real-life casual users of the network can make transactions. Moreover, the current implementations are still quite buggy. Lightning Network developers have urged users to learn about the network using Bitcoin’s testnet and not send any real money.
The developers are also advising users to stay patient, as the network’s code is very complex and requires rigorous testing. To be fully adopted by the Bitcoin community, the Lightning Network will need to prove itself to be safe and usable. With that and many other factors in mind, experts predict that a fully working Lightning Network can be from several months to a couple of years away.
As to the reason why the network will be used, the answer is simple: scalability. If the network will actually provide a solution to Bitcoin’s main issue, it will most likely be adopted by other cryptocurrencies.
If that happens, there is a possibility of cross-chain atomic swap technology being developed further, thus marking a first step towards building truly decentralized cryptocurrency exchanges.
Pros
As it was mentioned before, the Lightning Network is only making its very first steps. It’s still very much in development, and whether it will actually work as the developers imagine it still remains to be seen. If it does, here are some of the most important advantages of the Lightning Network you can benefit from:
Transaction speed. Once the network is live, you won’t have to wait for several confirmations of every transaction you’re trying to make. The transactions will be almost instantaneous no matter how busy the network is. If this happens, the cryptocurrency market will make huge steps towards being able to compete with traditional payment systems like Visa, MasterCard and PayPal.
Transaction fees. As the transactions will actually take place within the Lightning Network channels and outside of the blockchain, you will only need to pay the tiniest fees, if any at all. This is one of the main advantages of the Lightning Network, as this will fully enable Bitcoin to be used as a form of payment in shops, cafes, bars and so on.
Scalability. The Lightning Network is said to be able to take the transactions per second figure of Bitcoin and other cryptocurrencies to unprecedented heights of at least 1 million transactions per second.
Cross-chain atomic swaps. The first tests of cross-blockchain transactions worked, and this is all very exciting. As long as the two blockchains share the same cryptographic hash function (and most major one do), the users will be able to send money from one chain to another without having to trust a third-party intermediary, such as an exchange. This technology has a truly revolutionary potential.
Security and Anonymity. The vast majority of cryptocurrencies out there are not fully anonymous. The transitions can still be traced from one wallet to another. When it comes to the Lightning Network, though, most of the transactions happen outside of the main blockchain, so all the micropayment made via Lightning channels will be almost impossible to trace.
Cons
Not fully operational. Perhaps the main disadvantage of the Lightning Network at the moment is the fact that’s it’s not fully operational yet, so there’s no way of fully asserting how good it actually is. Moreover, it’s concept looks great on paper, but as of yet it’s impossible to find out whether it’ll look as great once realized.
Complexity of channels. The Lightning Network is conceptualized as sort of a web of channels which, once established, should theoretically allow for seamless transactions. However, there is no telling what will happen if the payment will have to take too convoluted a route. Surely, if your transaction will need to go through dozens of intermediate channels, the fees will add up.
Channel caps. Another drawback of the network is the fact that in its current version the channels are capped. That is, the amount of Bitcoins stored in the wallet by the two users upon establishing a channel is the maximum amount of funds in that channel. This setup creates a situation where some users might need to choose between having liquidity within the Lightning Network channels and having liquidity outside of them, on the main blockchain. This is far from ideal, especially for those with rather limited resources.
Hubs. Moreover, there have been concerns voiced over forming of ‘hubs’ – a sort of nodes with a lot of capital that the majority of transactions will go through. Many Bitcoin enthusiasts see this as further centralization of the network. But, it is unlikely that such hubs will be able to make any significant profit of transactions fees.
Again, it is worth pointing out that at the moment both the advantages and drawbacks of the Lightning Network listed above are very speculative.
Should I use the Lightning Network?
Well, as a matter of fact, if you’re not an advanced user, you can’t use Lightning Network just yet. So, the best – if not the only thing you can do right now is wait and see whether the lightning network lives up to the hype, whether it can actually function and described and whether it’s safe.
Bear in mind, the Lightning Network is not the only scaling proposal out there, and it’s by no means an undisputed leader in that race, with Bitcoin Cash (BCH) being its main rival. The debate between the BCH adepts and the Lightning supporters is fierce and there’s no end in sight. It could be that one of those proposals comes out on top, they could potentially coexist, or there can be an entirely different solution.
The Lightning Network sounds exciting. If it actually delivers, consider what you actually use your Bitcoins for. If you use the tokens as a long-term investment and nothing else, you might not even need the Lightning Network, as currently it doesn’t seem entirely safe to entrust it with handling big transfers.
But, if you view Bitcoin as an alternative form of payment, the Lightning Network, provided it lives up to the expectations, will be essential for you. Instant micropayments, increased anonymity, almost non-existent fees – it really seems to offer solutions to most of the Bitcoin’s problems.
