The Lightning Network is designed to make your BTC transactions as quick and affordable as possible. It is a new crypto technique called “layer-2 blockchains,” where you can be on some HOV lanes on highways. By depositing some transactional traffic to the layer-2 blockchain, you can make layer-1 move quicker.
Use cases of Lightning Network
- Twitter lets its users send and receive BTC “tips” through Lightning Network. The Strike app helps millions of Twitter users send BTC payments to other Twitter users for free instantly.
- El Salvador was the first country to make BTC legal. The government developed Chivo, a Lightning-supported wallet to allow seamless and international payments.
Is Lightning Network critical?
As described in the whitepaper of 2008 by Satoshi Nakamoto, Bitcoin was peer-to-peer electric cash that would ease people into buying goods and services online.
But with Bitcoin’s value growth in the last few years, it is now called digital gold. Well, it happened because of the way the Bitcoin Network was made. It allows strangers to safely send and receive money without any centralized or credit card company involved.
Because of its decentralized network of computers worldwide, Bitcoin can easily transfer payments without any involvement of third parties. However, it needed to accomplish consensus regarding the present state of Bitcoin’s digital ledger. And mining emerged to be a solution to this process.
The Lightning Network helped Bitcoin function like digital cash, as envisioned by Nakamoto. It processed transactions “off-chain” quicker and cheaper than the core blockchains of Bitcoin. Lightning transactions are less energy-taking than primary blockchain transactions.
While the significant bitcoin transactions on layer 1 handle ten transactions every second, the layer-2 Lightning Network can handle millions per second.
Working on Lightning Network
The Lightning Network uses smart contracts to set up off-blockchain payment channels between two users. After the establishment of payment channels, funds are transferred immediately between them.
Of course, the network doesn’t have to create pairs between all users. For instance, if X has a channel with Y and Z has a channel with Y but not X, funds can easily be transferred among all parties.
The lightning address is similar to the usual Bitcoin address, and the payment procedure is almost identical. Users can settle their balances and close the payment channels at any time.
As the opening and closure of payment channels are recorded on the blockchain, the entire BTC network moves faster. Lightning Networks are more private than layer 1 Blockchain transactions.
How to get started with Lightning Network?
If you’re going to make transactions through the Lightning Network, you should send some BTC to a cryptocurrency exchange to a lightning-supporting wallet. There are a lot of wallets available online to choose from.
Once you have signed up, you can easily make transactions by managing your private key. You can send perform as many transactions as possible and close them once you’re done. The transactions are faster, more affordable, and more convenient.
So, go ahead and sign up for a Lightning Network and start sending and receiving Bitcoin now.
