Existing cryptocurrency protocols will need to evolve in a significant way. More specifically, to the average consumer, it makes no sense to pay a fee to move bitcoins or altcoins between accounts. Coming up with lower-fee or even feeless solutions will not be easy, though. The Lightning Network is one possible way, but there is also a concept known as Flash Channels. The latter option is a development introduced recently by the developers of IOTA.
Flash Channels are Instant and Feeless
It is always remarkable to see different project developers come up with similar solutions for one specific problem. This is one of the reasons why different altcoins can serve specific purposes, as Bitcoin is not the perfect cryptocurrency by any means. This doesn’t mean we will see altcoins competing with Bitcoin in any significant manner, though, but it’s always interesting to see what other teams are able to come up with.
IOTA is one of those altcoins most people aren’t too sure about just yet. Though it’s one of the top 10 cryptocurrencies by market cap, very few people are aware of IOTA’s recent developments. One of those developments goes by the name of Flash Channels, which work pretty similar to Bitcoin’s Lightning Network. Providing instant and feeless transactions is a major development for any cryptocurrency in the world; that much is rather evident.
The IOTA Foundation has been working on layer-two solutions for a while now. Flash Channels create bidirectional off-Tangle payment channels which provide instant high-throughput transactions. This means different entities on the network can send money back and forth in as many transactions as they would like without experiencing any delays whatsoever. More importantly, they can do so without paying transaction fees, which is a pretty intriguing development in its own right.
Moreover, using Flash Channels means users don’t have to wait on network confirmations either. Money is transferred in the blink of an eye and can be spent by the recipient immediately. Interestingly, none of these transactions are recorded on the main IOTA blockchain either. That chain will only record the transactions related to opening and closing the payment channel in question. This is a very important breakthrough for the IOTA ecosystem; that much is certain.
Opening a Flash Channel still requires users to deposit equal amounts of IOTA into a multisig address controlled by all users. Once deposits are confirmed, the channel can be used for as long as needed. When everything’s said and done, the final balance will be published to the parent blockchain. It is an excellent way to reduce blockchain bloat and open up new opportunities to move money around the world with little to no friction.
All of this goes to show there are multiple ways to achieve instant cryptocurrency transactions at little to no cost. Especially when it comes to layer-two solutions, Flash Channels are – on paper – equally as impressive as Raiden or the Lightning Network. It is good to see the IOTA team providing the community with such a major development update, as it shows there is still a lot of work being done behind the scenes. The future’s certainly looking bright for most major cryptocurrencies.