The search for a secure alternative to the very popular ERC-20 tokens on Ethereum has turned up an unexpected solution: issuing tokens via Bitcoin’s Lightning Network second layer protocol.
A CoinDesk article reports that BHB Network co-founder and staunch critic of Ethereum Giacomo Zucco has hit upon the solution that he claims could change the game for entrepreneurs via a better token-minting protocol:
“If ethereum is going to die eventually, then we have very high hopes that this will be sustainable long term.”
He has named the open-source token project as Spectrum and it already benefits from several powerful names in the industry such as investors Fulgur Ventures and Poseidon Group, and startups such as Bitrefill and Chainside. Even crypto exchange Bitfinex has thrown its weight behind it, all of them keen to change the prevailing mindset about Bitcoin’s slowness for experimental tech.
Bitfinex CTO Paolo Ardoino already commits to issuing a Tether version compatible with Spectrum before the end of 2019, adding that “Bitfinex will continue supporting Lightning projects and features in our platforms”.
Spectrum will use RGB colored coin standards that will be tied to actual Bitcoin so that tokens can be issued several layers above it. In effect, instead of competing with sidechains like Liquid, it complements them and enables cross-currency swaps within Lightning channels.
This is very different from tokens on Ethereum, which are all operated via smart contracts and has built-in support for complex functions. This, according to ConsenSys employee Gregory Rocco, is why colored coins never got popular, since they required external coordination.
“If you want to do something with tokens, we think Layer 3 is the right place to put it. With lightning now you can be competitive, fast, creative, reckless.”
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