Does the Bitcoin Lightning Network make Bitcoin Cash obsolete?

Direct from the desk of Dane Williams.

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While Bitcoin’s Lightning Network could potentially make Bitcoin Cash obsolete, key centralisation questions remain.

When it comes down to it, Bitcoin Cash's use case is money.

But as we have already talked about, Bitcoin Cash (BCH)’s main drawback is the network isn't as secure or decentralised as Bitcoin.

So now that Bitcoin has the Lightning Network for payments, does this make Bitcoin Cash obsolete?

In this blog post, we'll explore whether the Lightning Network makes Bitcoin Cash irrelevant.

And ultimately if BCH still has a role to play.

What is Bitcoin Cash (BCH)?

Let's start by talking about Bitcoin Cash (BCH).

Remember, its main use case is as a form of digital cash.

It was created as a hard fork of Bitcoin in 2017 with the aim of improving on the lack of scalability that the Bitcoin network offered.

Bitcoin Cash increased the block size limit from 1MB to 8MB, allowing for more transactions to be processed per block.

However, there was a tradeoff to increasing the block size limit.

It made the network less secure and more centralised.

Never a good thing if your end goal is permissionless money.

This is because larger blocks take longer to propagate through the network, making it easier for miners to collude and control the network.

Ultimately, while Bitcoin cash has always been cheaper and easier to use as money than Bitcoin, centralisation is the problem that Bitcoin Cash has been facing since its inception.

What is Bitcoin (BTC)?

Now, let's talk about the Bitcoin (BTC) Lightning Network.

Lightning a layer-two scaling solution that was developed for Bitcoin, allowing for instant, low-cost transactions by using payment channels that are off-chain.

This means that the transactions are not recorded on the Bitcoin blockchain until the payment channel is closed.

The bottom line is that the Lightning Network has been a game-changer for Bitcoin.

It has significantly improved the scalability of the network, allowing for more transactions to be processed per second.

It has also made transactions faster and cheaper, which is important for Bitcoin's adoption as a medium of exchange.

Yep, Bitcoin Cash’s primary use case.

So does the Lightning Network make Bitcoin Cash obsolete?

So, does the Bitcoin Lightning Network make Bitcoin Cash obsolete?

It may sound like it on the surface, but let’s not get too carried away here.

Remember, the Lightning Network is just a layer-2 solution built on top of Bitcoin.

So without monetary incentivisation for people to run Lightning Network nodes, there is a question around whether they’ll face scaling issues that will ultimately lead to the centralisation of infrastructure.

For me, the risk of centralisation on the Lightning Network, as with any system that relies on a network of nodes to function is real.

While the Lightning Network is designed to be decentralised, without proper incentives, there may not be enough nodes to support the network.

Leading to centralisation and the elite nodes with full control.

While that would say that the Lightning Network certainly won’t make Bitcoin Cash obsolete, Lightning is trying.

To do this, there are several incentives for users to run Lightning Network nodes.

For example, Lightning Network nodes can earn fees for facilitating transactions on the network.

Additionally, by running a node, users can have more control over their own transactions and avoid relying on centralised intermediaries.

Furthermore, there are ongoing efforts to improve the incentive structures within the Lightning Network to ensure its decentralisation.

Accordingly, there are proposals for routing fees to be distributed more fairly among nodes, ultimately incentivising more people to run them.

Final thoughts on whether Bitcoin (BTC) and Bitcoin Cash (BCH) can ultimately co-exist

The Lightning Network has significantly improved the scalability of the Bitcoin network, making it faster and cheaper for transactions.

However, its long-term viability and decentralisation remain to be seen.

As I spoke about above, the Lightning Network is working hard to ensure that they provide monetary incentives for people running nodes.

Yet, until the questions around potential centralisation are fully addressed, Bitcoin Cash remains a viable alternative for those who prioritise transaction speed and cost.

If I’m honest, the answer is no.

Lightning is not going to be able to answer these questions any time soon and as such, Bitcoin Cash will continue to be a viable alternative.

For now...

Best of probabilities to you.

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