Last week, the long-awaited version 4.0 of the popular Electrum Bitcoin wallet finally appeared, which has a number of exciting new features. The latest version, for example, offers support for the Lightning Network, Watchtowers, Partially Signed Bitcoin Transactions (PSBT) and Submarine Swaps.
The integration of the Lightning Network into the open source Electrum bitcoin wallet is exciting, because the wallet has been popular with bitcoiners for many years. The integration of the Lightning Network in the latest version of the software can therefore make an important contribution to the further adoption and growth of the Lightning Network.
Electrum 4.0. is finally released. It supports PSBT, Lightning, Watchtowers, Submarine swaps.
With the Lightning Network, bitcoin transactions can be done very quickly and cheaply. The network exists as a two-layer network ‘on top’ of the Bitcoin network and aims to increase the transaction capacity and speed and to enable new functionality.
Via the Lightning Network, users can make transactions with each other via Payment Channels, whereby only the final or intermediate position is occasionally registered on the Bitcoin blockchain. You can do that between two people, but you can also set up an entire network of users: the Lightning Network. A single bitcoin transaction can thus represent a multitude of Lightning Network transactions.
This is interesting because the normal transaction costs of Bitcoin in the form of a miner’s fee can be spread with it and the transaction speed is no longer limited by the block time of 10 minutes that applies on the Bitcoin blockchain. Transactions Via the Lightning Network are almost instant and they only cost a fraction of a cent. This opens the doors for a multitude of applications, such as micro-payments. The Lightning Network also offers privacy benefits and more options, such as atomic swaps or token issuance for digital assets.
The Lightning Network actually consists of a complex web of individual payment channels between users. Within these payment channels, funds are shifted back and forth like a kind of jigsaw puzzle, but it sometimes happens that the liquidity is on one side. In that case, channels must be closed and / or new channels opened and that costs on-chain transaction costs on the Bitcoin blockchain.
With Submarine Swaps this is not necessary and as a user you can easily refill your Lightning Network wallet for a small fee. Normally you have to open and close channels yourself, but via a Submarine Swap you simply send bitcoins to a bitcoin address of a Swap provider (in this case Electrum itself) that in return returns the same amount of bitcoins via the Lightning Network. When that is done, the previously sent bitcoins are released to the Swap provider and if not, the code automatically returns the bitcoins to them.