As the Lightning Network developers inch closer to creating a solution for Bitcoin's scaling issues, it is important to consider that the concept of off-chain transactions is not a new one and that there are already multiple altcoins utilizing this strategy with great results. Below you will find just a couple examples of the ever-growing list of altcoins that already utilize some form of “Lightning Network” like protocols.
BTC has taken some considerable backlash because of its ridiculous transaction fees and delayed transaction times. In its current state, the BTC network is inadequately prepared to handle full scale mass adoption. Looking to cure these woes, Lightning Network developers have been working around the clock to iron out any glitches in their proposed fix. While this is by no means an easy task, the developers have the advantage in that they can always research altcoins use of similar protocols and how they managed to avoid network bottlenecking.
The concept of computing a transaction off chain has been around years and the altcoins that have utilized this concept have seen great success in tackling scalability issues. Below are three examples of altcoins who have managed to avoid scalability issues through the use of “Lightning Network” style protocols.
Whether you love or hate Ripple, you have to admit that these guys have managed to put together a solid altcoin with real use scenarios. This year has already seen a flurry of new banking institutions adopt this cryptocurrency for large interbank money transfers. The Ripple network utilizes an off-chain settlement function to reduce transaction times significantly.
This off-chain solution has allowed Ripple to handle over 1,500 transactions a second. Compare that to BTC's 7 transactions a second time frame and it is easy to see how XRP has managed to avoid network congestion. Additional testing has shown that the Ripple network has the ability to handle around 50,000 transactions a second in its current state.
Almost every major cryptocurrencies is experiencing some form of added congestion on their network and since most of the altcoins seen today are ERC-20 compliant, it only makes sense for developers to create a scaling solution that can function on the Ethereum network.
Ethereum is currently the #2 cryptocurrency in terms of market capitalization and this altcoin has seen huge success as a launching platform for tokens. Last year alone well over a 100 ERC-20 tokens were introduced into the marketplace. This has caused the network to experience delays similar to what BTC was going through in its early stages of scalability problems.
The Raiden Network introduces the concept of payment channels to the Ethereum blockchain. This off-chain solution is entering the testing stages currently and developers are hoping to see a completed protocol this month. Considering the amount of Ethereum-based games entering the market, it only makes sense to alleviate any scaling issues before they get out of control.
Chimaera – CHI
Chimaera has taken an innovative approach to the scalability problem by creating a new type of payment channel specifically developed for blockchain-based games. These game channels will allow gamers the ability to create a provably fair, automatically-escrowed gaming experience directly in the channel.
These “smart contract” like gaming channels are designed to be Peer-to-Peer and eliminate central server costs. The man behind this development, Dr. Daniel Kraft has been vocal on the capabilities his protocol brings to the marketplace and there has been considerable hype around this project.
What you think Bitcoineers? Will these altcoins help to further the development of off-chain solutions? Let us know in the comment below.