Bitcoin’s much-anticipated third halving occurred on May 11, 2020. After the halving, its block reward reduced from 12.5 to 6.25 per blocks mined. This had an immediate effect of reducing miners’ earnings and causing the network hash rate to drop sharply. . Statistics from May 11 to May 17, show that the Bitcoin hash rate dropped about 38% from 137.5 exahashes, a measurement of computing power, to 85.8 exahashes per second.
This sharp drop in computing power raised concerns over Bitcoin’s performance and congestion issues regarding slower blocking speed, with Bitcoin only generating a block every 14 minutes.
The network congestion problem will translate into inflated network service fees, and affect the trading experience for users–challenging the feasibility of Bitcoin’s use for multiple micro-transactions.
At present, the Bitcoin network can only process 7 transactions per second. Bitcoin’s scalability shortcomings have been a long debated topic, with the general consensus being that as the frequency of congestion increases due to low transaction processing speeds, and a growing user base–it will become unusable and unfeasible to scale.
The other side of this problem is the direct effect congestion has on miners. As we know, Bitcoin’s PoW consensus depends on miners’ ongoing computing power. Despite this, whenever congestion occurs, miners must pay higher fees to confirm transactions faster. Congestion and high service fees may have been somewhat manageable and for low frequency use scenario, this case changes as Bitcoin pursues broader adoption. To put this into perspective, in a small and high-frequency transaction scenario–the current reality, Bitcoin’s network congestion becomes an insurmountable barrier towards broad adoption and usability…
In order to solve the congestion problem, developers have proposed many solutions, none-more prominent than the Lightning Network.
The Lightning Network is a layer 2 protocol built on top of the Bitcoin network. Its role is to build multiple payment channels to enable fast transactions for participating nodes.
The Lightning Network treats the underlying Bitcoin network as a bank, where Lightning acts as a transaction or payment processing application such as Alipay, WeChat Pay or PayPal.
If we continue on the idea of Lightning as an “Alipay” for Bitcoin, we find that the transactions between you and the merchant will only be recorded within the Lightning Network. I.e., they will not be directly submitted to the “bank” or in this case the underlying Bitcoin network, until all your transactions are completed and finalized and you chose to close the transaction channel. The Lightning Network will then submit the end results of your transactions across the Bitcoin network.
The emergence of the Lightning Network is good in that it facilitates instant payments and reduces transaction fees for Bitcoin.
However, because the Lightning Network has been hotly criticized by many for seemingly deviating from the original intention of Bitcoin, a wholly decentralized peer-to-peer payment vehicle, towards a close-ended or centralized two-party transaction channel.
NerveNetwork: building a cross-chain “lightning network” of Bitcoin
Cross-chain technology has made great progress since it was first conceptualized by projects like Lightning Network. NerveNetwork, a cross-chain rising star that will soon initiate airdrops, has been developing the Bitcoin cross-chain for some time now. NerveNetwork’s unique design has the potential to become a Bitcoin cross-chain similar to the “Lightning Network,” delivering true innovation and inspiring the development of new applications that can revitalizes the utility of Bitcoin.
NerveNetwork adopts POCBFT, a consensus mechanism for independent innovation.
POC refers to Proof of Credit, which is the abbreviation of credit consensus mechanism, and is the consensus mechanism used by the NULS blockchain. BFT refers to Byzantine Fault Tolerance. As the name implies, POCBFT is a product of the combination of POC and BFT by the NerveNetwork development team.
POC, as adopted by NULS, has the dual characteristics of DPOS (Delegated Proof of Stake) and POS (Proof of Stake). Not only does NULS boast low energy consumption, but also increased performance. The addition of BFT, according to the test data released by NerveNetwork, will improve its performance to approximately reach a block speed of about 1 to 3 seconds.
Besides the advantages of the consensus mechanism, NerveNetwork’s main network nodes are divided into three tiers: ordinary nodes, consensus nodes, and virtual bank.
In NerveNetwork, the top 35 with the highest deposit will become the consensus nodes, and the top 15 of the consensus nodes with the largest deposit will become virtual banks. The remaining nodes will become ordinary nodes to provide support for applications and transactions.
NerveNetwork’s three tier nodes architecture not only ensures that the entire network has very high performance, but also ensures that the entire network has good decentralization characteristics.
Moreover, NerveNetwork adopts NULS microservice underlying architecture for development, and has high scalability. Utilizing NerveNetwork can accelerate application docking and development.
This makes NerveNetwork a cross-chain Lightning Network-liek solution that can solve the centralization problem surrounding the current Lightning Network. NerveNetwork connects together NULS or other NULS parallel chains through itsNetwork, sharing its smart contract functionality and leveraging the Defi applications of BTC and ETH.
The emergence of NerveNetwork will invigorate all holders of Bitcoin and be the inspiration for new development.