Posted by Hugos Way on 23rd Jan
The Lightning Network
With so much talk about Bitcoin, it follows that there will be talk about The Lightning Network as well. In order to understand how the latter helps Bitcoin scale, we need to first understand what the Bitcoin Lighting Network is and how it works.
Understanding The Lightning Network
The Lightning Network system is slated to be built on top of Bitcoin; it would allow people to instantaneously receive or send out payments. This helps reduce the transaction fees as they are kept off the system's main network and helps Bitcoin become more useful as a regular use currency.
The Lightning Network- how it functions
As mentioned, The Lightning Network is a smart system contract that's built on the Bitcoin blockchain base that allows for direct, cheap and speedy payments between two parties. In order that these fast and cheap transactions go through, the steps that have to be taken are:
At first glance, this may sound a little complex and tedious, but the fact is that the end user doesn’t have to make any additional effort to conduct their lightning payments. All these things take place in the background via an automatic system.
The privacy aspect
The Lightning Network uses the payment channels in such a manner that the users are able to conduct their transactions directly with each other rather than advertising these to the rest of the Bitcoin users via the blockchain. Since both the parties are able to track the payments made via their transactions, it saves them a lot of time and money on interactions with the blockchain.
While The Lightning Network offers a number of benefits to users, it is highly scalable too. It has the capacity to handle literally billions of transactions every second across the network. This kind of capacity outruns all traditional payment rails by a significant number. In short, The Lightning Network will only help Bitcoin scale and become appealing to a larger number of users.
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