Since we are claiming BitShares can scale to 100,000 transactions per second I thought it would be fair to weigh in on what the Bitcoin core devs plan for scaling:https://lightning.network/
I watched the video presentation of the slides and found the entire thing fascinating. Here are my takeaways:
1. It functions a lot like a "collateralized" ripple network. To make a payment you must find a route between the sender and receiver.
2. It requires "interactivity" and active participation of all links in the route, including the receiver.
3. It would reintroduce privacy to the blockchain.
3. While the simple example of A->B->C->D appears to be simple enough where "B" and "C" are well known hubs. If you replace A and D with 1000A's and 1000D's then the combinatoric complexity of the "un-broadcast transaction" between B and C can get rather large, especially when you consider all of the possible intermediate states. B and C would probably end up setting up many parallel payment channels to prevent any one channel from becoming too complex.
4. Even on the "lightning network" the time it would take to negotiate all of the handshakes and routing would be a second or more assuming nodes were distributed around the world.
Their definition of scalability is: 7 billion people making 2 transactions per day each. 162,000 transactions per second. 50 Mbyte/sec "best case"
BitShares can handle that on a single computer at 20 Mbyte/sec which is well within reach of many data centers. Internet2 can handle 12 Gigabyte per second bandwidth.
So here is my overall conclusion:
1) The Lightning Network would make an excellent currency if the complexity can be properly managed because it would be both fast and private.
2) To send a payment to an "offline" receiver would require hitting the blockchain.
3) It will not work for markets on a blockchain
4) it would be "buggy" because long chains can have many failure points that end up "locking up funds" for longer than intended and would require some kind of reputation system due to the cost of opening a channel with a bad node.
5) Economics of scale would drive most transactions through a small set of hubs because they can offer lower fees and have high reliability (no hangs waiting for a timeout). These nodes would end up being like a 101 delegates and require much more than 50Mbyte/sec due to all of the handshaking required.
6) While the number of transactions that end up hitting the blockchain will be fewer, the size of the transactions hitting the blockchain will be much larger.
At the end of the day, the Lightning Network will end up just as centralized as any other network due to pure economics.
Conclusion: a complex solution compared to BitShares approach that ultimately results in similar centralization and fees and is only fit for transfers.