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Ready to Wumbo: LND Enables More, Larger Bitcoin Transactions on Lightning

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Bitcoin’s Lightning Network has reached a significant milestone. An important capacity limit meant to protect users of the nascent protocol is being tweaked, toppling a barrier to entry for companies looking to adopt the novel payment system. 

LND, a leading Lightning Network implementation from startup Lightning Labs, has announced it has adopted support for wumbo channels. Going forward, users can deposit more money into Lightning Network channels than before, as well as send larger transactions.

Read more: What Is Bitcoin’s Lightning Network?

ACINQ’s eclair and Blockstream’s c-lightning both adopted a form of wumbo earlier this year. According to LND’s fresh release notes, the node software now allows users to opt into “accepting” and “creating” wumbo channels.

What is wumbo?

The word “wumbo” comes from, believe it or not, SpongeBob SquarePants, a cartoon series about a talking sponge that works at a burger joint under the sea with an assortment of sea friends. In one scene, SpongeBob’s starfish friend Patrick Star teaches him the word “wumbo.” 

“You wumbo, I wumbo,” Star says, pointing to Spongebob, then himself. Lightning’s “wumbo” is similar in that two users have to agree to wumbo before they wumbo.

There are two parts to wumbo. The first part removes the limit to the total amount of bitcoin that can be held in a channel: This limit is currently capped at 0.16777215 BTC, worth about $1,988 at press time. The second strips away the limit to how large an individual payment can be: That limit has been 0.04294967 BTC, worth about $508 at press time.

Read more: This Spongebob-Themed Tech Proves That Bitcoin’s Lightning Is Advancing

Wumbo isn’t technically difficult; in fact, it’s very simple. With wumbo channel support, a user can signal he or she wants to go beyond the aforementioned limits and find other nodes to connect to that also support higher limits.

Developers added the limitation to protect users from pouring too much money into Lightning, as it’s still a new and experimental technology. As such, one reason wumbo is a big deal is it is a sign that the payment technology is maturing.

“We view shipping wumbo in LND as a sign that the software has progressed to a certain point where advanced users, companies, and node operators can open larger channels. These larger wumbo channels enable a better user experience with larger transactions on the network and more efficient capital usage for startups and node operators,” a Lightning Labs spokesperson told CoinDesk.

That’s not to say they don’t think people still need to be careful working with this new technology.

“That said, we do not encourage people to go all ‘DeFi’ on Lightning (looking at you, YAM), as we believe people should balance the risks of deploying capital on a new protocol that could have bugs with the benefits of larger channel sizes,” Lightning Labs added.

Why wumbo?

Average Lightning users might not be impacted much by wumbo. If they’re using the Lightning Network to send small amounts, then this lift on capacity won’t make a difference to them. 

Larger entities such as business or exchanges, on the other hand, might want to take advantage of a larger capacity.

“Most users can likely get by without wumbo channels, but larger nodes or exchanges/services may really benefit from the ability to manage a smaller set of larger channels,” LND developers explain in the release notes.

Read more: To Beat Online Censorship, We Need Anonymous Payments

That’s why some developers think wumbo will take the Lightning Network to the next level. They think it will attract wider adoption of the Lightning Network among larger entities, making it accessible to more bitcoin users.

“Most of the major node operators and startups run our LND implementation, so unless they’ve forked LND and added Wumbo themselves (which a few have, and this was riskier without official support), they would not have had this feature enabled,” said the Lightning Labs spokesperson.

Still, some companies have already added support for wumbo without waiting for an official route to do so. As such, Acinq CEO Pierre-Marie Padiou is skeptical LND adding support for wumbo will make a huge difference.

“It can’t hurt, but larger nodes […] have already switched, so the improvement has probably already taken place,” he told CoinDesk.

Are we ready to wumbo?

Channel and transaction limits were put in place to protect users from potentially losing large amounts of bitcoin by sending it over an experimental network. What makes developers think Lightning is now ready to live without these limits?

“I think we’ve gained experience, and with that comes confidence,” said Blockstream engineer Rusty Russell, though he still expressed caution: “As always, it’s best to think of Lightning as your petty cash, rather than your life savings.”

Read more: Grasping Lightning: Mapping the Key Players in Bitcoin’s Next Phase

People have a choice – they obviously don’t have to use the ballooned capacity that wumbo channels allow. “With regard to security, with Eclair you can decide whether or not you decide to allow large channels and what the maximum channel size you accept [is]. We also scale the number of confirmations for the funding transaction depending on the amount of funds at stake,” Padiou told CoinDesk.

Russell also pointed out that the payment limit of 0.16777215 BTC was far less valuable, equivalent to about $10 dollars, when it was originally proposed years ago. As bitcoin’s price has increased over the last several years, this value limit has ballooned to almost $2,000. So, to a degree, the limit has naturally lifted over time.

“So we got wumboed already without having to even put our belt on,” Russell said, referencing the belt SpongeBob wears in the wumbo scene.

Disclosure

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Source: https://www.coindesk.com/wumbo-lnd-larger-bitcoin-transactions-lightning

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SEC approval: firm seeks to invest $500 million in Bitcoins

Guggenheim seems SEC approval to invest $500 million in Bitcoin The investment company is set to join the like Square and Microstrategy in Bitcoin investments Guggenheim Partners, one of the largest investment companies in the United States, has requested authorization from the Securities Exchange Commission (SEC) to allow it to allocate some of its net […]

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  • Guggenheim seems SEC approval to invest $500 million in Bitcoin
  • The investment company is set to join the like Square and Microstrategy in Bitcoin investments

Guggenheim Partners, one of the largest investment companies in the United States, has requested authorization from the Securities Exchange Commission (SEC) to allow it to allocate some of its net assets in Bitcoin.

Available information has shown that the Wall Street giant made the filing so that Grayscale Investments would be in charge of the 10% investment.

SEC has gone on to mention the different risks that may be attached with investing in cryptocurrency. The regulatory body also described crypto assets as digital assets that can serve as a medium of exchange.

Guggenheim is using one of its funds for this purpose. The fund is called the Macro Opportunities Fund. The fund available in this purse would be used to carry out this investment.

Fidelity Digital Assets and Morningstar have posited that the fund Guggenheim would be drawing from has close to $5 billion under its management in assets. This means that if the fund should carry out the 10% investment, it would be investing in Bitcoin worth $500 million.

Based on the current price of Bitcoin, the investment company would be purchasing over 27,000 BTCs.

SECs approval of Guggenheim will continue trend of institutional investors

If Guggenheim should go ahead with its purchase of $500 million worth of Bitcoin, this would continue the year long trend of institutional investors in the crypto space.

This year alone, we have witnessed institutions like PayPal integrating crypto features into their payment gateway. We have also seen Jack Dorsey’s Square investing in the popular crypto asset.

Not only that, Microstrategy has also invested deeply in the crypto industry.

All of these investments by these major institutions show their growing commitment and interest in cryptocurrencies as a viable store of wealth.

The SEC has also tried to implement a varying level of regulations on the crypto industry. The commission appears to be interested in putting some clarity to the operations of how the crypto market works.

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After exec declares Bitcoin maximalism ‘over,’ XRP price surges

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In a podcast for Lend Academy recorded Nov. 5, Asheesh Birla called Bitcoin (BTC) a “pretty innovative alternative to gold,” but added that 2020 had shown there was room for a lot of tokens in the crypto space.

Birla said that he believed Bitcoin had not “gone after” payments, and because different projects had different use cases, the coin’s overwhelming dominance was no longer a certainty:

“I think that the days when folks believed that there’s only going to be Bitcoin, I think, are over. I think it’s clear that there’s gonna be a lot of digital assets and there’s gonna be a lot more traditional assets that are gonna be tokenized as digital assets.”

The RippleNet GM made the comments when the price of XRP was roughly $0.25. It has since tripled, surging to $0.92 last week before crashing 30% amid a wider market rout.

Despite the lack of movement in XRP at the time, Birla added he was feeling bullish over the crypto space coming back “red hot again” after the 2018 crash.

“I don’t see the traditional venture capitalists as interested as they were in 2017,” he said. “But in my mind I couldn’t be happier in terms of innovation in the space.”

Both Ripple co-founder Chris Larsen and CEO Brad Garlinghouse have recently expressed frustration at the lack of regulatory clarity for Ripple in the United States. Last month, SBI Holdings CEO and Ripple board member Yoshitaka Kitao said that the blockchain-based payments may be considering relocating its headquarters to Japan. Larsen believes authorities in the U.S. have a “regulation through enforcement” policy and are “woefully behind” in preparing for the cryptocurrency-based next generation of a global financial system.

At the time of publication, the price of XRP is $0.61, having dropped 3% in the last 24 hours.

Source: https://cointelegraph.com/news/after-exec-declares-bitcoin-maximalism-over-xrp-price-surges

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Here’s how the Bitcoin, Ethereum markets are ahead, even if the prices aren’t

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As things stand, Bitcoin and Ethereum trail their respective 2017 peaks by 10 percent and 150 percent, respectively. Clearly, one is further away than the other, but both cryptocurrency’s markets are closer to the infamous bull market than you’d think.

According to the market intel report by blockchain analytics firm Chainalysis, while Bitcoin might’ve seen some ‘froth,’ fundamentals remain strong. Even with BTC’s declining price, dropping from $19,000 all the way down below $17,000, inflows to exchanges are above their long term average as hodlers are still selling off their held crypto, despite the depreciating price. 

Outflows are muted compared to inflows as BTC balances held on exchanges have risen to 11,900 Bitcoin. According to the said report, the narrative has changed to speculating on exchanges, rather than taking Bitcoin for self-custody as an investment, given the rapid price increase over the past week.

BTC Exchange Inflows | Source: Chainalysis Markets

Under the radar, given Bitcoin’s price increase, is Ether, the native token of Ethereum. With the blockchain hurtling towards Ethereum 2.0, inflows have also increased. At the time of writing, around 670,000 ETH were held on exchanges, a 40 percent increase on the 30-day average. These inflows were driven from crypto-to-fiat exchanges, rather than fiat-to-crypto exchanges, with the report suggesting that ETH hodlers are shifting away from DeFi and towards fiat. 

Trade intensity, a metric that measures cryptocurrencies flowing into an exchange against order book trades, is also on the up for ETH. This finding revealed that the altcoin’s price was “weaker” than Bitcoin’s since it acted as a lagging indicator for the former’s drop from $610, a two-year high.

Looking back at the week, it began with shades of 2017 green before it ended up with deep cuts of 2018 red. The report likened this week to a ‘bull-run’ initiated by a rapid price increase in the Bitcoin and altcoin markets, followed by the love/hate element of the market  – FOMO.

Going forward, with ATHs to be tested soon enough, how will the market play out? Will holders cash out at this two-year high, or will holding on for dear life get a new definition? Hold on even in a bull market? Time will tell. 

Source: https://eng.ambcrypto.com/bitcoin-etehreum-markets-prices-ahead

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