What is Lightning Network? This is a descriptive term for a bitcoin scaling solution that improves transaction speed, transaction costs, and network flexibility. So what exactly is this term and how does it work?
1 – What is Lightning Network?
It is a protocol with scaling and acceleration functions for blockchain platform. It was designed to solve some of the limited problems of bitcoin.
However, It is not only to solve the problem of bitcoin alone but can be applied on any other blockchain project.
The bitcoin network can only transact up to 7 transactions per second. Compared to visa processing 2000 transactions per second is too small. In response to global transactions, the lightning network solution was born to help solve this problem for bitcoin.
2 – How lightning network works
It has an off-chain system built on the bitcoin blockchain that is operated at a P2P (peer-to-peer) level.
Its applicability is based on the principle of creating a 2-way payment channel. As a result, users can transact more seamlessly.
Active transactions will be executed through smart contracts without the need for system-wide consensus.
Remember that the transaction speed is faster and the transaction fee will also be much lower.
3 – Advantages and disadvantages of lightning network
3.1 – Advantages
Helps reduce traffic load on bitcoin’s blockchain system.
Transactions process faster and transaction costs are also lower.
Transaction agreement validations are done on computers via smart contracts without the need for humans.
It is not exclusively used for bitcoin’s blockchain, but any other blockchain platform can apply.
3.2 – Disadvantages
During the transaction, if the recipient is offline, the payments cannot be made.
4 – Conclude
Currently, It is one of the leading solutions for scaling the Bitcoin blockchain, and importantly, requires no changes to the underlying protocol. If the Lightning Network succeeds, it will fundamentally change the debate about Bitcoin’s scale and its potential use cases.