All we know is that Bitcoin is the first crypto currency and we always called it the god of crypto. In fact, many financial analysts have already predicted that the next financial system will be in this world according to Bitcoin. But there is one problem with bitcoin and this can be a major problem too for it to be financial assets in future. The problem is it’s transaction fee, which is much higher than other top coins. For this fee problem many people start to think Bitcoin will not last long in future and will lose it value. And for this reason the Bitcoin team has brought a solution which is the Bitcoin lightning network. This ensures that bitcoins fast and less fee transactions like light speed. You know bitcoin can process up to 7 transactions but this number of transactions is very low according to the Bitcoin cash transaction limit. And on a lightning network you can process millions and millions of transactions per second. Let’s talk about it today!
What is a lightning network?
Lightning network is an off-chain layer 2 payment protocol which processes the first transaction within a payment channel apart from the main blockchain protocol to reduce the scalability of the bitcoin or litecoin network. Especially this is decentralized network protocol which is out of any one control.
How does it work?Â
Well, lightning network is really an easy decentralized payment system protocol which ensures fast and less fee transactions from user to users easily. But how does this happen? Suppose, i want to buy coffee every morning from my nearby coffee shop with bitcoin but the problem is if i pay the coffee bil every time by bitcoin main blockchain then the cost of bitcoin transaction will be more higher than my coffee price. So I will pay the bill of coffee to the coffee shop via lightning network and for this reason we will need to have a payment channel for the payment of coffee. The payment channel is like a multi signature wallet where both of the users will have their own private key for the wallet and without both private keys, there will be no transaction which will be processed on the main blockchain. Again, the lightning network is a off chain payment protocol which is separate from the main blockchain so if in lightning network if you made millions of bitcoin transactions then it will not come in the main bitcoin blockchain because those transactions were held on channel only between me and the coffee shop.  Anyway, suppose i have deposited on the payment channels around 0.005 Bitcoin and each coffee price is around 0.00001 Bitcoin. So if I order coffee from the coffee shop more than 100 times then the total transaction will be 100 and the cost will be  0.001 Bitcoin. But this 100 transaction did not happen on the main blockchain of bitcoin at all but happened on off-chain protocol with fast speed. So if the coffee shop now wants the payment on their main wallet like a normal bitcoin based wallet then we both need to submit our private key on the channel in order to process the transaction on the main blockchain. After submitting the key the transaction will be done on the main blockchain. Now what are the results? The result is that from 100 transactions only 2 transactions are processed on the main blockchain. The first one I have deposited Bitcoin on the payment channel then it was processed by the main blockchain and last one when the coffee shop wanted it’s bitcoin on their wallet.
This is the advantage of the lightning network. Suppose you did 100 transactions on bitcoin blockchain then can you imagine the transaction fee you paid and the time it takes to be done while lightning network ensures your payment within one second and there is no fee you can say like one satoshi per transaction.Â
Lightning network security!
Some people argue that the lightning network has no security and it can be hacked within a moment. But they should know how multi signature wallets work. Multi signature wallets are the most secure wallets as far as I know because without a private key even one satoshi will not be transferred from the wallet. Suppose hackers hack the lightning network protocol but how will they hack the user's private key which users stored already? And without the private key a hacker can not transfer funds. Even the lightning network team is working on its security too because the more secure this network will be then the more people will rely on it so that the scalability on bitcoin's main blockchain will be reduced.Â
Lightning network is the only way that bitcoin can be used as a daily payment currency all over the world someday. In fact, EL Salvadar now exchanges bitcoin via lightning network.Â
What is your view about bitcoin lightning network? Tell us:
Cheers!
The Lightning Network is what could give BTC back its function of payment currency. Hopefully, the number of transactions in LN continues to grow and be adopted more and more.