Written in front: The author of this article is Nik Bhatia, who has worked on both traditional financial market transactions and Bitcoin. He realized that bitcoin is digital gold. But when he realized the value of the lightning network, he began to devote himself to Bitcoin. He believes that with the lightning network, people no longer need to argue whether Bitcoin is a digital gold or a payment tool, because it will have two functions. Nik is now a researcher at Bitcoin payment company OpenNode.
The following is an article published by Nik:
- Is the Ethereum futures contract really coming?
- The key to blockchain applications: How to use distributed commerce to capture user timelines?
- Popular science | Privacy protection is worrying? Encrypted data warehouses show their talents (core use cases and requirements analysis)
- Babbitt Column | Cai Kailong: How Libra Get Out of the Dilemma
- Exploring Ethereum 2.0: Evolution of Blockchain Incentive System
- Bitcoin Position Weekly | The largest such account has begun to “prompt risk”
I am a market fan. “Market fans” refers to a person who relies on observing the rise and fall of asset prices and constantly trying to analyze the causal relationship of each volatility. So, when I first understood the true nature of the Bitcoin protocol, I also began to be fascinated by its price.
In 2016, I started my bitcoin "Rabbit Cave" tour (that is, I started to understand Bitcoin). At the time, I was trading US Treasury bonds and other interest rate products for an institutional asset management company, which was my first big deal. This is the first time in my life that I have had the opportunity to get to know some of the smartest people on Wall Street, so I can say with certainty that I also started to jump into the “rabbit hole” of the banking industry in 2016.
At the same time entering the bitcoin and the rabbit hole in the banking industry, the most crazy thing is the difference in scale; this is unimaginable. At the time, the market value of Bitcoin was less than $20 billion. I am a small-scale participant in the bond market and sold $20 billion in government bonds in a few months. One looks too small and the other is too big. I know that if I want to understand the scale of the global financial system, I must learn to think in trillions.
I will never forget the moment when I conquered the concept of trillions. My colleagues and good friends play digital games every day. The question this time is how much money was settled through the Federal Reserve's wire transfer system last year? I thought for a minute, did some mental arithmetic, and gave the answer: three-quarters of a billion. The answer is of course $767 trillion. I have lost $17 trillion, but the error rate is less than 3%, which is 1,000 times higher than the market value of Bitcoin. Bitcoin is really too small, less than $20 billion, and the zero in the dollar system is enough to make people dizzy. I have determined that in the next 10 or 20 years, the two will be reconciled and I should spend my time on Bitcoin. I started thinking about living off the trading platform because I knew I might be dealing with Bitcoin.
Bitcoin is digital gold
I looked at national debt, stocks, gold, oil, and money and tried to understand how they work together. I see Bitcoin playing the role of gold and playing a solid currency role in the digital future. The game theory of supply planning and difficulty adjustment attracted me. I started digging deeper and immediately discovered that an update called SegWit was the topic center, and it would implement something called "Lightning Network."
The first time I used Bitcoin, I tracked the status of the transaction on the block browser. Soon, I realized the settlement process of Bitcoin; it was so exciting. Of course, the first block took more than half an hour, and I panicked. Basically, after a few blocks, the final settlement makes people feel very safe, but for any daily transaction, spending an hour is completely unrealistic. In my opinion, Bitcoin is obviously a kind of digital gold. It doesn't take a few weeks to settle at sea, it only takes about an hour. Unbelievably powerful and in fact revolutionary. But it is not a global "currency".
Lightning Network makes Bitcoin a global currency
Lightning Networks has revolutionized Bitcoin with instant billing. In a lightning network, settlement does not need to be bound by the block confirmation time. The architecture of the Lightning Network includes an instant settlement financial agreement, guaranteed by a fair transaction. Lightning Network has greatly expanded the circulation speed of Bitcoin. Bitcoin's trading ability has increased by many orders of magnitude. The most important thing is to open a new wave of Bitcoin innovation.
The concept of "mobile money" has spurred software developers, and I was shocked by some of the use cases they proposed. The Bitcoin supply plan initially attracted me, but the Lightning Network was the reason why I finally decided to enter this market. I decided to dedicate my wisdom to Bitcoin's Lightning Network, because it is a value-storing asset with the speed and scale of trading media. It is unprecedented in human history and worth pursuing.
After years of bond trading, interest rate traders and bitcoin fanatics, it’s time to go to Bitcoin. Earlier this year, I saw the OpenNode team in downtown Los Angeles, only a few blocks away from where I traded government bonds. The Lightning Network and its role in bringing Bitcoin to the world have had a profound impact.
The message I conveyed to them is clear: I want to help the world build the LNP/BP (Lightning Network Protocol/Bitcoin Protocol) stack, just like the ubiquitous TCP/IP (Transmission Control Protocol/Internet Protocol) stack, the world The Internet infrastructure is built on top of this. To my delight, they invited me to join.
Lightning network is just the beginning
Since the debut of the first year of last year, the pace of innovation in lightning networks has been staggering. I laughed when I heard skeptics say that the capacity and growth of the lightning network was stagnant because of random public channel indicators. The Lightning Network is not a public ledger like Bitcoin. It is actually a private ledger, making the so-called chain analysis independent of the lightning network. Any attempt to analyze the growth of the lightning network from the outside is futile.
Moreover, frankly, what I heard on the financial media about Bitcoin is just digital gold is a bit outdated. These people either don't know the lightning network technically or don't know it exists. Bitcoin is now working at the speed of light, which is a precious but very bulky metal that can never be done.
At OpenNode, we don't have to guess whether Bitcoin is a value store or a transaction medium. We know both, and we know that these two functions are crucial to the structure of Bitcoin. The vast majority of the transactions we deal with are conducted through the Lightning Network, but the vast majority of the value we deal with is carried out on the chain. We also don't have to guess if people want to use a hosted solution. When I asked our CEO and co-founder Afnan Rahman, what was the biggest surprise since he founded OpenNode, he said that I was surprised that we won the trust of the community so quickly, even including some hardcore names. Bitcoiners.