Lightning Labs Announces ‘Loop’ Feature That Improves Bitcoin Payments Channels

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Lightning Labs announced a new feature for the Lightning network that aims at improving its use for bitcoin payments.

According to the company, the new feature called “Lightning Loop” will allow users in a payment channel to receive and withdraw an increasing amount of bitcoins without closing and reopening another payment channel.

The feature, like LN, is a technology designed to scale the bitcoin network and improve payments.

The release is a significant step in the scaling of bitcoin for everyday usage. At the moment users pay a fee every time they open a new payment channel and have to wait longer before proceeding with the next transaction.

Users are however able to send and receive bitcoin payments instantly and at lower costs within these payment channels. The difference with the Lightning Labs’ Loop feature is that a normal payment channel set up on Lightning Network will have a fixed capacity.

This means that to increase the capacity users must close and open a new payment channel, but Lightning Loop changes that.

In a blog post, Alex Bosworth and Bryan Wu describe Lightning channels as “tubes of money” where value moves around but the funds within the channels remain constant.

They also added that the Lightning network requires channels to maintain an ‘inbound capacity’ for users to receive funds.

But Lightning Loop allows this inbound capacity to be withdrawn making it possible for a user to maintain the same payment channel when receiving bitcoin.

Simply put, the Lightning Loop allows for funds to be moved out of payment channels into bitcoin wallets, cold storage or into fiat currencies on exchanges. According to the blog post, emptying payment channels allows users “to receive more payments.”

Bosworth and Wu refer to this feature as “Loop Out,” but have indicated that they are working on a new one called “Loop In”. This feature will enable payment channels to use “on-chain bitcoin” that can be refilled from wallets or exchanges.

The developers believe that Loop will benefit the lightning network by improving its efficiency scalability and usability.

They, therefore, called on “developers, testers, and enthusiasts” on the lightning platform to try the Loop feature.

Lightning Loop has been received positively since its alpha release a few days ago.  Some commentators have already pointed out that it has the capacity to solve channel liquidity- one of lightning network’s biggest pain points.


Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.

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