MIT is testing Lightning Network with smart contracts

Test MIT shows how bitcoin can actually work in terms of scaling of the second layer. One of the most prestigious technical universities in the United States demonstrated an experimental use Lightning Network in the Bitcoin blockchain.

Testing shows that if you add smart contracts the network can not only process millions of transactions, but do it with a higher degree of difficulty.

The creation of a model developed under the Digital Currency Initiative (DCI) was launched in 2015 with the aim of further development of research and development in the field of cryptocurrency. The test involves a system in which the transactions will be carried out automatically in the event of certain external events, for example, based on today’s weather or the current exchange rate of bitcoin to the dollar.

This was possible due to the unusual use of MIT’s so-called «oracles» — trusted entities, is designed for data transmission in smart contracts. For this demonstration, the researchers Taj Draya (Tadge Dryja) and S. Alin Dragos (Dragos Alin S.) created a test Oracle to broadcast the recent price of the US dollar in the Satoshi, the smallest unit of bitcoin that anyone can use for their smart contracts.

This is a very important step for the concept that last summer proposed Draya — the Creator of Lightning. Dragos says:

«We created this as a separate function of our software for Lightning Network. We chose the data, which, in our opinion, can be useful. It can be any data about the weather or stock prices».

Dragos said that the demo is «experimental» and «it should not be used with real money». However, he and other researchers from mit believe that using Lightning Network Bitcoin may one day increase bandwidth, making it such dreaming about a early network users.

In this work, researchers at MIT have created an implementation for the Lightning Network called lit, and the code Oracle is a complement to this effort.

«We at DCI believe in Lightning Network. Bitcoin is not very good scales, and I decided that in this area there is room for improvement. It turned out that Lightning Network is the best solution. This method of scaling».

Smart contracts Bitcoin

While Lightning provides scaling, smart-contracts are adding other new features to the Bitcoin. For example, if tested by the MIT technology will be implemented in the network, you will be able to do something like betting on events taking place in the world. Or, as in this case, to participate in a futures contract. It is a kind of advanced smart contract, which is usually not associated with the Bitcoin.

«When people think about smart contracts, they are thinking about Ethereum. Their scripting language is much richer,» admitted Dragos.

But he claims that using some workarounds Bitcoin can also benefit from this technology.

«It’s not just for developers, because Bitcoin did not develop in this direction, but you can use the technology. For this you need to think a bit creative,» said Dragos.

For this purpose the scheme of the «hidden log-contracts» (contracts discreet log) developed by Draya for transferring data to smart contracts. One of the most important advantages of this scheme is scalability, since most data does not need to be stored in the blockchain of Bitcoin.

Another solution is tied to privacy — oracles can’t see who is using the data that they broadcast.

Some difficulties

Although this testing has been completed, Dragos and Draya believe that there are still many unsolved problems and «difficulties», says Dragos. «If you try to think like the Oracle, it becomes clear that they are interested in earnings. We need to understand it,» said Dragos.

In addition, the Oracle at this stage – trusted entity. However, there may be a way to minimize that trust, giving the user the opportunity to apply to several oracles.

While DCI MIT hopes to bring the work to a certain stage, and then pass it on to someone else.

«We work with companies that can implement it,» said Dragos. And although he did not name specific firms, he mentioned that «large companies» partners DCI. It is hoped that these larger companies have a better understanding of what is expected from the ordinary users of the software. Thus, despite the fact that DCI MIT have created a prototype that demonstrates how the underlying technology works, they have not created and do not plan to create an easy to use working application.

Now development enables the user to use data of any Oracle in its sole discretion. Thus, the decision about what data to use, lies with the community.

«It is difficult to imagine how the data will benefit the community. We can’t predict what users will decide», he added.

MIT is often the center of attention of the cryptocurrency community due to the strong researchers and developers studying the problems of industry. It was recently reported that the University found three ways to destroy bitcoin, and earlier it became known that MIT Professor received
$ 4 million to create a «superior blockchain». In addition, last fall, the University said
plans for issuing diplomas to its graduates through the blockchain.

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