Bitcoin startup Blockchain has released the first version of a payments channel prototype that finds it moving its research efforts into how transactions on the bitcoin network can be made faster and more effective into the public eye.
The startup, which has raised $30m in one public round of funding, announced the alpha release of the ThunderNetwork today. Best described as a Blockchain-led effort into the implementation of payment channels, the technology seeks to allow bitcoin users a way to conduct off-blockchain transactions that settle against the bitcoin blockchain at a later date.
Given the sometimes high cost of settling against bitcoin’s blockchain, which can fluctuate (sometimes greatly) with demand for block space, the ecosystem has long sought to bridge bitcoin’s ability to be denominated into units as small as one one-hundred-millionth of a bitcoin with the fact that fees to settle such transactions against the blockchain are generally prohibitively higher than such values.
To date, the most prominent effort to bring payments channels to the bitcoin network has been the Bitcoin Lightning Network, an open-source project that has since coalesced into a startup called Lightning, which boasts some of the community’s more notable developers.
Still, Blockchain CEO Peter Smith sought to stress that the announcement represents a significant step forward for the bitcoin network given that the technology is useable at a limited scale today. Further, while spearheaded by Blockchain, he emphasized that ThunderNetwork can now be built on by the wider community of bitcoin developers.
Smith told CoinDesk:
“Thunder is already open-sourced. It’s more functional today [than other versions of lightning networks], because it’s the first network of this style that’s settled back to the main blockchain.”
In a demonstration of the network and its capabilities, Blockchain detailed how Smith and ThunderNetwork lead developer Mats Jerratsch tested how the tech can be used for person-to-person transactions.
The technology has already received widely positive feedback, with Twitter mentions even from innovators in the private blockchain side of the ecosystem weighing in on the significance of the release.
This enthusiasm was palpable in the startup’s announcement of the news, with the company writing:
“This is a big deal and we’re excited about the work ahead.”
Comparisons to Lightning Network
Announced last August, the Thunder Network is intended to be a “low-trust solution” to payments channels, one that used mostly tools available to bitcoin developers.
At the time, lead developer Jerratsch contrasted this with Lightning, which he characterized as a “no trust” way to achieve the same functionality. These differences can be seen in the design of ThunderNetwork released, as Blockchain is the only company that runs nodes on the network.
Nodes will route transactions using encrypted onion routing, with transactions moving through multiple nodes without any information about the individuals involved being disclosed to these entities. “It will go from my node to your node, to another person’s node, the basic routing methodology,” Smith said.
The official blog post provided more clarity, indicating that at each hop, the status of the payment will be renegotiated until the channel is closed and ultimately settled.
In interview, Smith sought to position ThunderNetwork as something that can work in conjunction with any implementation of payments channel technology for the bitcoin network.
“I think it’s complementary to any lightning network,” he said.
Protocol changes needed
Perhaps most notable about the release is that Blockchain still needs a few changes to be made to the bitcoin protocol so that Thunder transactions can settle against the blockchain.
The first, CheckSequenceVerify (CSV) was recently merged into Bitcoin Core but is awaiting further development as OP_CSV. Secondly, implementing Thunder will require the merging of SegratedWitness, the long in-development scaling solution that would alter how transactions are stored by the bitcoin blockchain.
Today, Blockchain said the network is “suited for transactions among a trusted network of users”, while cautioning that it should not be used for real payments.
As for how ThunderNetwork fits into Blockchain’s business strategy, Smith was less clear, though its blog post hinted the startup is currently seeking to expand its team of developers.
Smith concluded:
“As the tech matures, we’ll have to see what makes the most sense for it as a product. It’s very early, very raw technology.”
Thunder clouds image via Shutterstock