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In 2016, a popular ethos emerged among big banks and Wall Street types: bitcoin is doomed, but blockchain is exciting. Big name after big name in banking and financial services touted their new blockchain test pilots, and even posted lots of blockchain-related job openings.
For Lightning Labs CEO Elizabeth Stark and others working on bitcoin software, that narrative was never accurate. And now, after the staggering price surge of bitcoin, litecoin, ether, ripple, and other digital assets at the end of 2017, the pendulum appears to have swung back toward cryptocurrencies themselves.
Stark tells Yahoo Finance a story, one she says she has never told publicly (see the above video), that illustrates how overpowering the ‘blockchain, not bitcoin’ narrative became for a while. “When we first pitched my company Lightning Labs, we actually took the word ‘bitcoin’ out of our deck and our marketing material because it was so much about blockchain,” she says. “Now, I feel like we’ve entered into a ‘bitcoin, not blockchain’ world, where people understand the value of cryptocurrency technology and what these can bring. You also have proof of work in bitcoin, you have the public/private key cryptography. There are other things that make bitcoin special. Somehow, the blockchain part got separated and became a thing.”
Lightning is a second layer built on top of the bitcoin protocol that can facilitate faster and cheaper transactions, because the payments happen off-blockchain. Put simply: On a blockchain, which is a decentralized peer-to-peer ledger, thousands of computers have to all verify all the transactions. On Lightning, transactions are verified off-chain between the participants in a transaction, relying on blockchain only for security if something goes awry. Joseph Poon and Thaddeus Dryja published the Bitcoin Lightning Network white paper in 2015, describing the project as “scalable off-chain instant payments.”
Now Lightning Labs, helmed by Stark, has launched the beta of its Lightning software, LND. It is the first live software release for the Lightning protocol; the software can facilitate Lightning transactions in bitcoin or litecoin. Developers are now quickly building apps for Lightning (called “Lapps”), including an ice cream delivery service.
Lightning Labs also closed a round of seed funding from a slew of big names: Square and Twitter CEO Jack Dorsey; litecoin creator Charlie Lee; Robinhood co-founder Vlad Tenev; and Digital Currency Group, the biggest cryptocurrency startup investment firm, helmed by Barry Silbert.