Co-founder of Ethereum Joseph Lubin is sure that soon the crypto world will see real scalability as ethereum network enters the next stage of its life cycle. At the Rise conference in Hong Kong, he said that the time when we will see hundreds of transactions on the “layer two” of the Ethereum ecosystem is just around the corner. Lubin believes that this will happen later on this year:
“We’ll have hundreds of thousands of transactions in the layer two systems and we’re going to see that ramified this year.”
Lubin stressed that the time to move to the second phase has came, because at this stage "Ethereum can serve as the layer one trust system."
He is sure that the advanced system of the layer two will be based on the same infrastructure as ‘layer one’, and will be characterized by even greater decentralization. This means that ‘layer two’ systems can now become more mature and advanced. All new technologies will be introduced at level one. But, as they develop into products capable of servicing mass market, they will be moved to the second layer.
As an example, Lubin cited the Plasma project, which was introduced in August 2017 by Vitalik Buterin and Joseph Poon, the developer of Bitcoin’s own Lightning Network.
Co-founder Ethereum also stressed the importance of the statement of the U.S. Securities and Exchange Commission (SEC), when talking about the regulator saying that ethereum is not a security. This, according to Lubin, opens a completely new model of providing services and products to consumers using utility-tokens.
_What are multi-layer solutions?_
The bitcoin or ethereum blockchain is not very suitable for conducting micropayments. Second and third layer solutions are new networks placed on top of the main blockchain. They allow users to send multiple, small transactions at almost instant speeds such as buying a coffee or paying for a taxi ride.
Lightning Network based on ‘layer two’ will enable users to open direct channels among themselves to instantly send an unlimited number of payments to each other, much like an online banking app.
_What is Lightning Network?_
The concept of LN is based on an idea that not all transactions should be recorded on the register. Here is a situation: two friend transact several times among each other. In this case, they don’t have to register transactions on the blockchain. To simplify, those two can create a payment channel between and simply record the fact it has been opened. Those channels can remain open for weeks or years in order to continue processing transactions. But to close it, a user would need to register the event on a blockchain which would record the final result of all transactions that have passed through the channel.
For more information about the work of Lightning Network, take a look at our tutorial to find out how the ‘two layer’ system may operate.
By Ekaterina Ulyanova