Massachusetts Institute of Technology (MIT) has been testing out bitcoin’s lightning network, taking a look at how the cryptocurrency can enact smart contracts and not just handle transactions regarding sales and purchases.
The program commenced during the college’s Digital Currency Initiative back in 2015. The test believes that the Lightning Network would be able to allow for automatic transactions activated based on events in the real world like the weather or the price of U.S. dollar.
The basis for the lightning network’s decisions is its ‘oracles’, which are trusted sources of information for smart contracts that broadcast the necessary data. A sample oracle was built for the test and it was used to broadcast the recent price of U.S. dollars in satoshis, which is the lowest unit for bitcoin. In the future, anyone can use this oracle for their own smart contracts.
In a statement, Alin S. Dragos, one of the makers of the oracle, said
We built this as a standalone feature of our lightning network software. We chose data what we thought would be cool, U.S. dollars, but it could be any data you want, whether weather or a stock.
Dragos emphasized that this was all experimental as of now. He did say that the test convinced many MIT researchers that the lightning network would be able to allow for bitcoin to scale properly to the original vision of its first users.
As part of the test, MIT has already created a version of the lightning network called ‘lit‘ and they have integrated the oracle code to the network. The lightning network solves one of the problems that face bitcoin which is being able to service all its clients in a cost effective manner. It also adds smart contracts, which allows implementation of more complicated transactions like futures contracts.
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For example, a user on the network sets up a smart contract that will pay another the price of dollars in satoshis on a particular day. With the lightning network, this can be done automatically.
In the past, such contracts were usually associated with Ethereum, which made smart contracts its focus and has the infrastructure and language for it. However, MIT’s researchers insist that bitcoin can do the same thing when a little bit of creativity is added to the process.
However, there are still a few problems. For example, oracles will want to make money for the service they do. Next, there should be a way to ensure that the oracle is a trusted source of data. MIT hopes that bigger companies and communities would look into these developments and work on its further development.
