Welcome to bulliscoming media, the dilemma in the Bitcoin blockchain network has had most developers bring into existence an advanced blockchain network or probably a fork of the existing blockchain.
Bitcoin Lightning Network is layer 2 for Bitcoin blockchain that aims to solve the scalability issue in Bitcoin blockchain.
In this article, we will discuss Bitcoin Lighten Network, what is it? How does it work?
What Is Bitcoin Lightning Network?
Bitcoin Lightning Network is a decentralized network using smart contract functionality in the blockchain to enable instant payments across a network of participants.
The concept of the Bitcoin Lightning Network is to solve and eliminate permanently the issues involved in Bitcoin main blockchain, to make Bitcoin blockchain more appealing for transactions across the globe.
Below are the captivating features in the Bitcoin Lightning Network:
- Instant Payments
Bitcoin Lightning Network enhances lightning-fast blockchain payments without worrying about block confirmation times. Security is enforced by blockchain smart-contracts without creating an on-blockchain transaction for individual payments.
The lightning network makes payment speed measured in milliseconds to seconds.
The concept of the lightning network is also to improve the scalability in the main Bitcoin network, the current Bitcoin blockchain network can process only 5 – 7 transactions per second while the Bitcoin blockchain layer 2 – The lightning network is capable of millions to billions of transactions per second across the network.
Capacity blows away legacy payment rails by many orders of magnitude. Attaching payment per action/click is now possible without custodians.
- Low Cost
By transacting and settling off-blockchain, the Lightning Network allows for exceptionally low fees, which allows for emerging use cases such as instant micropayments.
- Cross Blockchains
Cross-chain atomic swaps can occur off-chain instantly with heterogeneous blockchain consensus rules. So long as the chains can support the same cryptographic hash function, it is possible to make transactions across blockchains without trust in 3rd party custodians
How Does Bitcoin Lightning Network Work?
The Lightning Network is dependent upon the underlying technology of the blockchain. By using real Bitcoin/blockchain transactions and using its native smart-contract scripting language, it is possible to create a secure network of participants who can transact at high volume and high speed.
- Bidirectional Payment Channels
Two participants create a ledger entry on the blockchain which requires both participants to sign off on any spending of funds. Both parties create transactions that refund the ledger entry to their allocation but do not broadcast them to the blockchain. They can update their individual allocations for the ledger entry by creating many transactions spending from the current ledger entry output. Only the most recent version is valid, which is enforced by blockchain-parsable smart-contract scripting. This entry can be closed out at any time by either party without any trust or custodianship by broadcasting the most recent version to the blockchain.
- Lightning Network
By creating a network of these two-party ledger entries, it is possible to find a path across the network, similar to routing packets on the internet. The nodes along the path are not trusted, as the payment is enforced using a script that enforces the toxicity (either the entire payment succeeds or fails) via decrementing time-locks.
- Blockchain as Arbiter
As a result, it is possible to conduct transactions off-blockchain without limitations. Transactions can be made off-chain with confidence of on-blockchain enforceability. This is similar to how one makes many legal contracts with others, but one does not go to court every time a contract is made. By making the transactions and scripts parsable, the smart contract can be enforced on-blockchain. Only in the event of non-cooperation is the court involved – but with the blockchain, the result is deterministic.
In conclusion, the Lightning Network will make a great impact on Bitcoin as a world digital store of value.
Despite the adoption of Bitcoin in the mainstream, there is still a variety of issues to be solved to make the Bitcoin network more appealing and the Bitcoin Lightning network is the major solution for the Bitcoin network.
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