Thunder Network: The first “trustless” Bitcoin payment channel

Bitcoin startup Blockchain has unveiled the first version of a prototype payment channel called Thunder Network, which promises faster and more efficient bitcoin transactions.

The startup, which has raised $30 million in Series A funding, today unveiled the initial version of the Thunder Network, a technology that allows bitcoin users to trade bitcoin off-chain before it is aggregated onto the bitcoin blockchain.

Given that transactions on the Bitcoin blockchain can sometimes be very costly, the Bitcoin ecosystem has long sought a way to enable transactions on a satoshi (one billionth of a BTC) level. However, in actual transactions, the transaction fees on the blockchain are far higher than the value of the transaction.

The most prominent effort so far is the Bitcoin Lightning Network, an open-source project where a startup called Lightning is developing the protocol.

Nonetheless, Blockchain CEO Peter Smith sought to emphasize that the announcement represented a significant step forward for the bitcoin network, as the technology has been successfully used on a limited scale. Furthermore, while the project was led by Blockchain, he stressed that the broader bitcoin developer community could build on the Thunder Network.

Smith told CoinDesk:

“Thunder is now open source and it has more features than other versions of the Lightning Network because it is the first of its kind to have payment channels that can return transactions to the main blockchain.”

The blockchain company ran a demonstration of the network and its capabilities, detailing a person-to-person test transaction between Smith and Thunder Network lead developer Mats Jerratsch.

The technology has reportedly received widespread positive feedback, even from those in the private blockchain ecosystem.

Announcing the news, Blockchain was enthusiastic, stating:

“This is extremely important, and we are excited about this work.”

Comparison with Lightning Network

Announced in August last year, the Lightning Network aims to create a "low-trust" payment channel and is currently a tool used primarily by bitcoin developers.

Now, lead developer Jerratsch has contrasted the Thunder Network with the Lightning Network, characterizing the former as a “trustless” payment channel that performs the same functions as the Lightning Network. These differences can be seen in the design of the Thunder Network, in which Blockchain is the only company running a node on the network.

Nodes will use加密洋葱路由to route transactions, which will pass through multiple nodes without personal information being disclosed to those entities. "It will go from my node to your node to another person's node, and that's the basic routing method," Smith said.

In the interview, Smith tried to position the Thunder Network as something that could work in conjunction with any of the payment channel technologies on the bitcoin network.

“I think it’s complementary to any lightning network,” he said.

Protocols need to change

It is worth noting that in order to implement Thunder transactions, Blockchain still needs to make some changes to the Bitcoin protocol.

First, CheckSequenceVerify (CSV) was recently merged into Bitcoin Core, but further OP_CSV development is still needed. Second, implementing Thunder Network also requires the incorporation隔离验证(which will change the way transactions are stored on the Bitcoin blockchain).

Additionally, Blockchain calls the network “suitable for transactions between trusted network users,” while the company also cautions that Thunder should not be used for actual payments.

As for how Thunder Network fits into Blockchain’s business strategy, Smith said it’s not clear yet, but he hinted in his blog that the startup is looking to expand its development team.

Smith concluded:

“As this technology matures, we’ll see what it really means as a product, but it’s still very early, very primitive technology.”