Bitcoin’s main network is very slow and expensive to use. The Lightning Network is built on Bitcoin to provide cheap and fast BTC transfers.
The Bitcoin Lightning Network was created to fix Bitcoin‘s scaling problem. Bitcoin has problems efficiently handling large transaction volumes, which results in high transaction fees and long wait times. Blockchains like Bitcoin often struggle to balance the three desirable blockchain properties of decentralization, security and scalability and often rely on ‘Layer-2’ networks to enhance their scalability.
Bitcoin’s creator, Satoshi Nakamoto, identified this problem in 2013 and proposed a solution involving off-chain payment channels between recipients. In this design, BTC would be deposited into an off-chain network where individuals could open payment channels and send invoices to each other without dealing with the blockchain. Individuals could then withdraw their BTC from the network and back into their Bitcoin wallets after everything is settled. An off-chain network would be capable of sending small amounts of BTC (such as that required for a coffee) almost instantly with no blockchain gas fees, whereas an on-chain BTC transaction can take up to an hour to settle fully and can cost an unpredictable (and sizable) amount of BTC in gas fees.
CoinTelegraph describes the Lightning Network as similar to Satoshi’s design, where participants deposit their BTC into the network’s BTC wallet after opening an account. Once they have an account, then they can open payment channels with other accounts on the network and send or receive invoices through the payment channels. Once the parties close their payment channels, the final balances are sent as a single transaction to the Bitcoin network, which is then settled by the Bitcoin miners and added to the blockchain’s history. The result is…
