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Last week, the prestigious MIT university has been secretly piloting an experimental use case for bitcoin’s lightning network, one that demonstrates how it can work together with smart contracts to not only handle millions of complex transactions.

The project was established within the school’s Digital Currency Initiative, which was initiated in 2015 as to enhance research and development on cryptocurrencies, the test sees a system in which transactions would occur automatically in the case of specified external events.

For this demo, MIT researchers Tadge Dryja and Alin S. Dragoṣ created a test oracle to broadcast the current price of U.S. dollars in satoshis, which anyone can use in their smart contracts.

The idea was first proposed by lightning inventor Dryja last summer, but this is the first time it’s been executed as a prototype with working code.

 “We built this as a standalone feature of our lightning network software. We chose data what we thought would be cool, U.S. dollars, but it could be any data you want, whether weather or a stock,” said Dragoṣ in an interview.

Dragoṣ emphasizes that the demo is “experimental” and “shouldn’t be used for real money.” He along with the other MIT researchers are certain that with the help of the lightning network, bitcoin will one day scale to the dimensions that were initially anticipated by early users.

To achieve this goal, MIT researchers have already developed an application for the lightning network called lit which is an add-on to that oracle code.

“We at DCI, we really believe in the lightning network. Bitcoin doesn’t scale very well. I decided there has to be something better. Turns out what’s better is lightning. It’s the way to scale,” Dragoṣ said.

Bitcoin and Smart Contracts

But while lightning offer scalability, smart contracts brings new functionality to bitcoin. If the tech in MIT’s test is executed, you could, for example, make a bet based on a current world event.

Or, in our current case, a futures contract. This type of advanced smart contract use case is usually not associated with bitcoin.

“When folks think smart contracts, they think ethereum. Their scripting language is much richer,” Dragoṣ confessed.

But, he claims that with some tweets, bitcoin can do the exact thing.

“It’s not as developer friendly because bitcoin didn’t go in that direction, but you can use it. You have to be a little creative,” said Dragoṣ.

The demo uses Dryja’s “discreet log contracts” scheme to transmit data to the smart contracts. One of the most important benefits of this scheme is scalability because there is a lot of unnecessary data storage on the bitcoin blockchain.

The other advantage is privacy since oracles don’t show who’s the user to which they’re broadcasting to.

“We’re introducing a model where oracles are not aware of who’s using the data they’re using,” Dragoṣ said.

Prospective Partners?

But while this simple demo is now finalized, Dragoṣ and Dryja believe that there are many unresolved questions and quandaries. “From the individual oracle’s perspective, they’re going to want to make some money. We’re going to have to understand that,” Dragoṣ said.

But MIT DCI hopes that sometime in the near future they will stop working on the technology and pass it off to someone else.

“We’re working with companies that might implement this,” Dragoṣ said. And though he couldn’t give any names, he revealed they are “big company” partners of the DCI.

They expect that these bigger companies will have a better chance of understanding what normal users require from the software. So, while MIT DCI created a demo showcasing how the basic technology actually works, they haven’t made an app is as easy to use as Facebook.

“UX is not our core expertise,” Dragoṣ explained.

The code is now open for people to use for any kind of oracle data they desire. it now all depends on the community to choose if this code is worth using or not.

“It’s a hard guess. It could be a significant deal if people use it. But we don’t know what people are going to be using it for. New technologies are available all the time, that doesn’t mean they end up making it though,” stated Dragoṣ.

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