Bitcoin’s Lightning Network (LN) is one of the most anticipated upgrades for the cryptocurrency. LN is a “layer 2” payment protocol that runs on top of a blockchain.
It enables fast, cheap, and private transactions.
The LN has been live on mainnet since early 2018. However, it’s still in its early stages of development and has yet to be widely adopted.
Nevertheless, the LN has great potential to improve Bitcoin’s scalability, privacy, and fungibility.
In this article, we’ll discuss what the LN is, how it works, and whether or not it’s good for Bitcoin.
What is the Lightning Network?
The LN is a network of “payment channels” that sits on top of the Bitcoin blockchain. It allows users to make multiple off-chain transactions without having to broadcast each one to the blockchain.
Transactions on the LN are instant and nearly free. They only cost a few satoshis (the smallest unit of a Bitcoin) to send.
And since they don’t need to be recorded on the blockchain, they can be processed quickly and without high fees.
The LN also provides a way to make Bitcoin transactions private. When you open a payment channel with someone, only you and that person know about it.
The details of your transactions are only stored on the two nodes (computers) involved in the channel, and not on the blockchain.
This makes the LN an attractive option for businesses and individuals who want to use Bitcoin but don’t want their transactions to be public.