What is Lightning Network?
The Lightning Network is a system that sits above a blockchain to expedite peer-to-peer trades.
Bitcoin and other coins like Litecoin have adopted it. Maybe you’re wondering what “sits above a blockchain” means. Lightning Network is referred to as layer two or off-chain solution. It enables people to make transactions without necessarily recording each transaction on the blockchain.
How Lightning Network Works
Lightning Network enables faster transactions as it minimizes costs by avoiding the primary Bitcoin blockchain. It lies under a network without structure. Channels consist of peer-to-peer networks where payments happen. Amounts that can be sent in the channel are limitless.
Nodes are what maintains the system and channel the payments. Nodes are handled by ordinary people or organizations that run the platforms using their laptops, desktops, or Raspberry Pis. This ensures the distribution of the Lightning Network.
Starting to use Lightning Network requires that any amount of Bitcoin be locked in a disbursement channel. It can thereafter be used in the entire Lightning Network as long as the channel is operating.
When an individual enquires for a transaction, they craft an invoice. These are extensive alphanumerical series of figures which is characterized mainly by QR codes. People who want to request the payment have to scan this invoice using their Lightning Wallet and verify (by issuing an online signature) that they intend to make payment.
After making the payment, verification is sent through the network to the individual who primarily issued the request. This is referred to as peer-to-peer connection and indicates that the payment process depends on a specific party. This usually takes a few seconds where the name Lightning comes from.
Because payments don’t take place on the Bitcoin blockchain, they don’t need long wait periods or expensive charges. It, therefore, shows that minimum payments or micropayments only require one satoshi (one hundred millionths of a bitcoin) to make. These are better for daily transactions, whereas more significant transactions can be performed using the Bitcoin platform.
After an individual is done using the Lightning Network, they can leave the network by closing the channel. It, therefore, states that they can re-use their Bitcoin on the Standard Bitcoin network.
Should You Use Lightning Network?
Basically, if you’re not an experienced user, it’s not advisable to use Lightning Network at this time. So, at this moment, it is advisable to relax and see if the Lightning Network will deliver as promised, and whether it will basically perform as stated, and whether it is secure.
Note that the Lightning Network is not the only scaling network available, and neither is it the only acknowledged network in the trade, Bitcoin Cash (BCH) being the leading competitor.
The argument involving BCH adepts and those supporting Lightning is vicious, and it might not come to an end. In case either of those proposals wins, they may decide to unite, or a different solution may evolve.
The Lightning Network seems promising. If it performs well, imagine what your coins could do. In case you only use tokens to invest for long-term purposes, you may not require a Lightning Network since it doesn’t seem secure enough to handle massive transfers.
However, if you see Bitcoin as an additional payment method, as long as Lightning Network provides what it promised, it will be best for you. Lightning offers immediate micropayments, heightened privacy, and almost zero fees, which are major cryptocurrency issues.