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Newsletter August 2020

Lightning-Network | Make-It Capital Fund | AMC I | AMC II

Lightning-Network

In this newsletter, we are trying to examine the currently most important second layer of the Bitcoin Network namely the Lightning Network

First though some fun facts about lightning as we probably all have miraged at them in our lifetime.

Lightning itself is a movement of electrical charges and surprisingly does not have a temperature of its own. However, resistance to the movement of its electrical charges causes such material the lightning is passing through to heat up substantially. Poor conductors heat up more than good conductors. In fact, lightning can heat up the air it passes through to 27.760 degrees Celsius (50,000 degrees Fahrenheit) – 5 times hotter than the surface of the sun[1].

About 2,000 people are killed worldwide by lightning each year. Thousands more survive strikes but suffer from a variety of lasting symptoms, including memory loss, dizziness, weakness, numbness, and other life-altering ailments. Strikes can cause cardiac arrest and severe burns, but 9 of every 10 people survive[2].

And yes, contrary to the common expression, lightning can and often does strike the same place twice.The huge brackish tidal estuary, Lake Maracaibo in Venezuela, receives the most strikes on earth.

In a phenomenon called Catatumbo Lightning, the lake is illumined about 28 times per minute for around 260 storm days per year[3].

[1] https://www.weather.gov/safety/lightning-temperature

[2] https://www.nationalgeographic.com/environment/natural-disasters/lightning/

[3] https://www.worldatlas.com/articles/what-is-catatumbo-lightning.html

 

Lightning is ubiquitous on earth with some 50 strikes per second and roughly 1.4 billion per year[4].

We believe lightning as a second layer of the Bitcoin Network will become even more omnipresent than its eponym.

Now, let’s try to get to the gist of it.

About every 10 minutes a new block will be added to the Bitcoin blockchain. On average, the Bitcoin blockchain can handle about 7 transactions per second. That is just not sufficient for everyday adoption. Plus, you’d have to wait up to 10 minutes for a confirmation and pay a comparatively huge transaction fee. In that time, your Starbucks coffee got cold. The Visa network, in comparison, can handle about 1,700 transactions per second.

So, a different solution is needed, should Bitcoin attract full adoption. And this is where the Lightning Network comes into play. As mentioned earlier, the Lightning Network is a second layer protocol for Bitcoin. Just like the Email or HTTP is a second layer protocol to the original ICP/TP internet protocol.

The concept of lightning is the brainchild of Thaddeus Dryja and Joseph Poon presented in a whitepaper[5] back in January 2016.

On its most basic level, the Lightning Network is a method for Bitcoin users to exchange currency value off the Bitcoin blockchain instantly and basically feeless. This is accomplished employing complex algorithms interacting with Bitcoin’s base script.

The Lightning Network itself is a network of payment channels. A payment channel here is a complex type of multisignature address for which two users hold a private key. Said differently, it is a private conversation between two users that enables the exchange of cryptographically enforceable IOUs. As long as both parties follow the rules, there’s no need to broadcast these individual transactions to the broader bitcoin network. In principle, two parties can make dozens, hundreds, or even thousands of payments to one another without cluttering up the blockchain.

The funds in the channel are shared between the two users. Let’s say Tim and Tom share a payment channel worth 20 BTC, each holding 10 BTC. Now Tim agreed to pay Tom 5 BTC for a service rendered by Tom. The payment channel is updated so Tim holds 5 and Tom 15 BTC. While all 20 coins are still in the same address. They can now do as many transactions as they wish. When they close the channel, which they can do whenever they want, the final score is settled. Only the first and the last transaction of this particular payment channel will be burnt into the Bitcoin blockchain. The above-mentioned algorithms make sure that neither Tim nor Tom can cheat on each other.

However, payment channels alone are not the solution to Bitcoin’s scaling issues. The Lightning Network provides a cryptographically secure way to chain payment channels together. Such cryptographically linked payment channels allow users to also pay other users even though they do not own a separate payment channel between them[6].

Now, how do you set up a payment channel?

Either you run a Lightning node (at the latest glance, there were 13,261 nodes supporting the lightning network with a network capacity of about 1,000 BTC[7]) or you download a Lightning App – a wallet. If you want to test some wallets, here are a few names: Wallet of Satoshi, Breez, Bitcoin Lightning Wallet, Peach Wallet, Éclair, Zap. There are many others. We have no link to any companies mentioned above. We suggest going out there and start trying it for yourself. It is amazing.

[4] https://science.nasa.gov/science-news/science-at-nasa/2001/ast05dec_1

[5] https://lightning.network/lightning-network-paper.pdfhttps://lightning.network/lightning-network-paper.pdf

[6] https://bitcoinmagazine.com/what-is-bitcoin/what-is-the-lightning-network

[7] https://1ml.com/

Make-It Capital Fund

Make-it Singapore operates, and Make-It New Zealand manages, the Make-It Capital Fund. The Fund aims at capturing the upside potential of the nascent cryptocurrency and blockchain industries whilst reducing volatility and overall risk through a 360’ degree investment approach employing our proprietary five-pillar strategy.

The Fund continues to outperform all other major asset classes:

AMC1

We have decided to discontinue the AMC1. We have closed the books and are currently paying back all investors their initial capital plus the gained interest. Instead, we will concentrate our efforts on the Make-It Capital Fund.

AMC2

Our innovative lending product is another world’s-first. As such, we have to satisfy a plethora of regulatory and compliance prerequisites. This is not possible in the current environment. Nevertheless, we are working very diligently with a different banking partner developing an even better product as it will also allow for US and UK investors. The aim still is the same. To generate 10-12% p.a. on USD with daily withdrawals and without touching any cryptocurrencies. Sounds too good to be true? Well, that is why it is difficult to implement. Otherwise, it would exit already. However, we feel confident that we can soon introduce our newest product which will be referred to from now on as – Make-It Lending. You are cordially invited to be added to the list of interested investors so we can keep you directly in the loop. Just send us a quick note or give us a call.

Should you be interested in receiving more information, please contact: contact@make-it.capital

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