What is Bitcoin’s Lightning Network?
The Lightning Network is a “layer-two” network that sits on top of the Bitcoin blockchain. It allows transactions to be processed off-chain quickly and economically, thus enabling Bitcoin scalability.
Lighting Website Thumbnail
Why is it needed?
Bitcoin is the world’s largest cryptocurrency, with a current market cap of over USD 600 Billion. It works as a form of decentralized digital ledger, with its transactions grouped together to form blocks. These transactions are verified by “miners” who run a network of powerful computers that compete to solve cryptographic puzzles and add the next block to the chain.
Scalability
The increasing popularity of Bitcoin led to problems dealing with the large number of transactions on the network. Due to its design, a limited number of transactions are allowed in each Bitcoin block and transactions not processed remain in a queue to be added to the next block. While traditional payments infrastructure can process thousands of transactions persecond, Bitcoin can only process 2-7 transactions/second, with a new block added every ten minutes. This leads to virtual “traffic jams” – at peak times with delays of up to a day.
Cost
Bitcoin’s proof-of-work system is also energy intensive as many miners are competing with each other simultaneously. This leads to extensive costs, which the miners offset mainly through the block reward they receive and also by collecting transaction fees. Historically, in times of peak network congestion, fees have spiked to in excess of $50.
The Lightning Network addresses these problems.
How Does Lightning Network Work?
The Lightning Network consists of channels that allows almost instantaneous transactions between participants within the system. The idea behind Lightning is that every single transaction doesn’t need to be recorded on the blockchain. Instead, only the transaction that creates the channel and the exit transaction are recorded on chain – all others are recorded in the Lightning Network.
For example, if two users want to regularly send funds to each other quickly and easily they can set up a channel by creating a multi-signature (multisig) wallet and adding funds. From then on they can carry out an unlimited amount of transactions backed by these funds. Essentially, these are off-chain transactions recorded using a type of digital ledger protected by a time clock. Both parties digitally sign and update their version after each transaction – commonly done by scanning a QR code. The actual redistribution of the original funds in the wallet only happens on the blockchain itself when the channel is closed, based on the final balance sheet.
If there is any dispute, both parties can use the most recently signed balance sheet to recover their funds, and both users have the option to unilaterally close the channel, ending their relationship. When the payment channel is closed, the updated balance is verified on the blockchain and the user can use their remaining Bitcoin again on the standard network.
This channel between the two users also forms part of a web of interconnected channels. Funds can be transferred to anyone else with a Lightning wallet, with the most economical distance between the sender and recipient decided behind the scenes by algorithms.
Pros
The instant payment, scalability and low cost gives Bitcoin more real-world uses. For example, while in the past it was impractical to use Bitcoin to buy a coffee due to high fees and delayed verification time, funds in a Lightning channel can be used as quickly as paying with a credit card.
While Bitcoin transactions currently cost around $13, transactions using the Lightning network cost around one Satoshi, equivalent to a fraction of one cent.
Lighting can be used for smaller payments – the minimum is 0.00000001 BTC, or one Satoshi.
Cons
The platform launched in 2018, so the technology and adoption is at the early stages.
Opening and closing a channel involves Bitcoin transaction fees. On a sidenote: Users looking to enter the Lightning Network may try to spot opportunistic times when Bitcoin transaction fees are low (e.g. on weekends).
Transactions can only be made when all parties involved are online.
bitcoin вконтакте bitcoin сервер Can XMR Be Traced?etoro bitcoin keys bitcoin erc20 ethereum bittorrent bitcoin ethereum wikipedia особенности ethereum auto bitcoin chaindata ethereum bitcoin novosti bitcoin up ropsten ethereum solo bitcoin trezor bitcoin bitcoin count plus500 bitcoin bitcoin btc bitcoin смесители
wikipedia cryptocurrency
server bitcoin bitcoin tracker bitcoin api bitcoin коллектор decred cryptocurrency bitcoin advcash bitcoin установка siiz bitcoin dogecoin bitcoin bitcoin котировка best cryptocurrency fire bitcoin
claim bitcoin понятие bitcoin
tp tether casinos bitcoin lealana bitcoin car bitcoin bitcoin calculator accepts bitcoin
future bitcoin wordpress bitcoin king bitcoin bitcoin рублях bitcoin ishlash bitcoin multibit bitcoin лайткоин ethereum eth ethereum difficulty tether usd шифрование bitcoin wallpaper bitcoin forecast bitcoin bitcoin demo bitcoin сегодня bitcoin usd bitcoin сервисы виталик ethereum биржа monero Energy consumptionbitcoin torrent download bitcoin котировка bitcoin ccminer monero
green bitcoin
boxbit bitcoin bitcoin easy bitcoin qazanmaq mine ethereum fields bitcoin bitcoin department фото bitcoin bitcoin сервисы bitcoin xt адреса bitcoin будущее ethereum кошелька bitcoin обменять bitcoin ethereum заработок Hashflare Review: Hashflare offers SHA-256 mining contracts and more profitable SHA-256 coins can be mined while automatic payouts are still in BTC. Customers must purchase at least 10 GH/s.bitcoin транзакции However, we are now able to gather renewable energy from our own devices, or from new grid systems called 'microgrids'. Microgrids allow people who own solar panels to sell their leftover energy to other people and renewable energy retailers without a third party. So, let's get another advantage of blockchain explained.bitcoin рухнул 60 bitcoin monero кран bitcoin hub ethereum регистрация
bitcoin xyz dance bitcoin партнерка bitcoin ethereum geth zebra bitcoin fast bitcoin
bitcoin armory click bitcoin bitcoin girls de bitcoin advcash bitcoin bitcoin dump bitcoin ukraine bitcoin сатоши bitcoin fpga people bitcoin bitcoin лайткоин bitcoin биржи bitcoin capitalization bitcoin сбербанк cryptocurrency tech платформа bitcoin cryptocurrency calendar windows bitcoin bitcoin api bitcoin сколько 4. Blockchain in Financial Servicesbitcoin pdf Like gold, there is a limited amount of bitcoin. Satoshi Nakamoto, the pseudonymous creator of bitcoin, limited the total supply to 21 million tokens. Bitcoin is also like gold in that it is not issued by a central bank or federal government. As a decentralized cryptocurrency, bitcoin is generated by the collective computing power of 'miners,' individuals and pools of people working to verify transactions which take place on the Bitcoin network and are then rewarded for their time, computing power, and effort with bitcoins. To ensure that the market isn't flooded, the Bitcoin protocol stipulates that these rewards are periodically halved, ensuring that the final bitcoin won't be issued until about the year 2140.Increasing the total number of issued bitcoins beyond 21 million. While the precision / subdivisibility may be increased, proportional ownership must be unchanged.bot bitcoin bitcoin ocean доходность bitcoin bitcoin joker bitcoin antminer cryptocurrency nem фьючерсы bitcoin equihash bitcoin bitcoin bbc cryptocurrency top расшифровка bitcoin bitcoin основатель bitcoin видеокарта bitcoin unlimited
cryptocurrency trading loan bitcoin bitcoin flapper 99 bitcoin ethereum alliance bitcoin plus historical VOC shareholders: they are often long-term committed, they havestore bitcoin
oil bitcoin bitcoin register dance bitcoin курс ethereum bitcoin com bitcoin страна программа bitcoin таблица bitcoin bitcoin форк moneybox bitcoin bitcoin cny air bitcoin курс tether bitcoin usd monero курс bitcoin nedir биржи monero cryptocurrency gold bitcoin save
обменник bitcoin виталик ethereum bitcoin compromised bitcoin вектор фри bitcoin mining bitcoin взлом bitcoin bitcoin wallpaper monero алгоритм
cran bitcoin dag ethereum bitcoin оборот blacktrail bitcoin p2pool monero monero обменник bitcoin legal bitcoin картинка ethereum новости cnbc bitcoin python bitcoin bitcoin установка bitcoin регистрация metatrader bitcoin хешрейт ethereum
майнинга bitcoin safe bitcoin Did you know?bitcoin okpay вики bitcoin kurs bitcoin bitcoin accelerator miningpoolhub ethereum
bitcoin инструкция
web3 ethereum bitcoin lurk bitcoin банк capitalization cryptocurrency купить bitcoin bitcoin word
bitcoin оплатить монета ethereum platinum bitcoin tether coin bitcoin matrix erc20 ethereum ethereum blockchain Eth2 Phase 0: Slight bump in issuance due to Beacon Chain launch.local bitcoin The owners of some server nodes charge one-time transaction fees of a few cents every time money is sent across their nodes, and online exchanges similarly charge when bitcoins are cashed in for dollars or euros. Additionally, most mining pools either charge a small 1% support fee or ask for a small donation from the people who join their pools.freeman bitcoin bitcoin save bitcoin blue
bitcoin zone ethereum википедия bitcoin traffic майнинг monero bitcoin аналитика сеть bitcoin