- Elon Musk wants Bitcoin to scale up.
- The Tesla chief is a proponent of the Lightning Network.
Tesla and SpaceX CEO Elon Musk, Bitcoin's former posterboy and now its number-one persona non grata, said that the Bitcoin network could meet rising demand if its users adopted the Lightning Network, a payments network that makes Bitcoin transactions quicker and cheaper.
“Bitcoin hashing (aka mining) energy usage is starting to exceed that of medium-sized countries. Almost impossible for small hashers to succeed without those massive economies of scale,” he tweeted today. “For now, Lightning is needed.”
Lightning is a piece of software that processes Bitcoin transactions outside of the Bitcoin blockchain to lighten the load on the network.
Without Lightning, it currently costs an average of $13 in fees and takes 14 minutes to move funds across the Bitcoin network.
With Lightning, moving funds costs around one satoshi, the smallest unit of a bitcoin (equivalent to 100 millionth of a bitcoin), and transactions are near-instantaneous.
Silicon Valley-based Lightning Labs started building Lightning in 2016. The company counts Twitter and Square CEO Jack Dorsey among investors. A protocol launched in beta in 2018.
Critics argue that Lightning sacrifices decentralization, since some of the computational work takes place away from the main Bitcoin blockchain.
“Achieving truly decentralized finance – power to the people – is a noble & important goal,” said Musk, in response to BTCSession, a crypto YouTuber who had asked whether Musk had considered whether Lightning sacrificed on decentralization.
Musk, who slammed Bitcoin due to its impact on the environment and reliance on Chinese miners, is looking at cryptocurrencies that use less than 1% of Bitcoin’s energy consumption.
Dogecoin developers claim that the Tesla CEO has offered funding to improve the network, which uses a fraction of Bitcoin’s energy consumption.
While Musk can move the market with his tweets—he contributed to a market meltdown that slashed $500 billion from the market earlier this week—his comments on Lightning didn’t affect Bitcoin’s price, which remains a steely $40,000.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
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