If you have been in the crypto world for a while now then you know how Bitcoin works. Bitcoin is a transaction system that works through the blockchain, each transaction is confirmed by miners. Bitcoin is introducing the Lightning network. This network improves the blockchain assets for our day a day life, Mainly bringing us: Instant Payments, Scalability and Micropayments. This technology will transform blockchain into a whole new experience.
About the Lightning network
- The Lightning network was founded by Elizabeth Stark. Elizabeth created the Lightning network so blockchain can be used for more aspects of our life. She just thought that there must be a way to make transactions better and faster.
I can send an E-mail, a message, an animated gif to whoever I want instantly. But why can no one do this with money?
Well, thanks to Elizabeth that is not a problem anymore.
How does this work
- The Lightning network is the second layer of transactions. This can enable instant high volume and very low fee transactions that are still decentralized on the blockchain.
- Payment channels are the basis on which Lightning Network works. For this to operate, both parties have to make a multi-sign transaction, in this transactions the key of each person has to be included. This unique process will need 10 minutes to open the channel. Once it is open, both parties can make an infinite amount of instant transactions to each other using the funds of the channel.
The improvements that lightning network brings to our lives
There are three main new technologies that will improve our blockchain experience:
- Instant payments: The fastest payments through the blockchain where you won’t have to worry about the block confirmation time. This is safe because the transaction still goes through the blockchain. This is like a private chat, but instead of chatting you send transactions. This allows the transaction to reach its destiny in miliseconds.
- Scalability: Allows the network to create from millions to billions of transactions per second. This will improve the use of Bitcoin, which its limit stays at 7 transactions per second.
- Micropayments: The lightning network works with extremely low fees. This means that micropayments can be performed without a big alteration on the amount.
- Nowadays a lot of money is supervised by the government, and a lot of banking accounts are denied or take a lot of time in opening. With bitcoin, none of this happens, and Lightning Network helps us to introduce Bitcoin into our lives.
This will affect cryptocurrencies
- The Lightning network is already being tested on Bitcoin and Litecoin. This update will increase the number of transactions gigantically, because now transaction will also be used for the little things in our lives. Due to the increasing number of transactions, the value of Bitcoin and Litecoin will shoot up. Also, Ethereum developed its own update called Plasma, this will be included soon.
Interview with Elizabeth Stark Co-Founder and CEO of Lightning Network
Elizabeth Stark: The goal of the Lightning Network is to bring a new generation of technology for Bitcoin and blockchains. This works through a second layer, which means it is not necessary to access the blockchain every time you transact. Effectively what we are doing is deferring the broadcasting of transactions to the blockchain. But doing so in a decentralized manner, where participants can send instant transactions to each other. If there is ever an issue, if someone tries to steal your money then you are always secured by the underlined blockchain itself.
Lightning Network technology will improve our daily transaction system, together with Bitcoin they will make our days greater.
And as always,
Alexander has worked in community growth for multiple cryptocurrency companies. He is now the Sales and Operations Manager for CoinDiligent. In his free time, he writes articles sharing his industry insights. You can get in touch with Alexander on LinkedIn.