Understand Lightning Network and How It Works Here!

Lightning Network is the second payment system that works on top of the blockchain network Bitcoins, making bitcoin transactions faster and more efficient.

Bitcoin uses a blockchain designed with the secure transfer of digital assets in mind. Because of this security, the number of transactions per minute (TPS) on the Bitcoin blockchain is low.

Meanwhile, because many people are using Bitcoin, this number of transactions may become a problem if Bitcoin is to grow.

The Lightning network was designed as a solution to the time-consuming nature of Bitcoin transactions. So how does the Lightning Network work? Check out the review below.

Understanding the Lightning Network

The flexibility or scalability of Bitcoin is still an issue. Bitcoin Transactions limited to seven transactions per second with 1 megabyte blocks, while payment companies such as Visa can process 4,000 transactions per second and can increase to 65,000 transactions per second. 

Bitcoin block size is only 1 megabyte. Therefore it was decided to keep the Bitcoin network secure. The bigger the block size, the longer it takes to confirm the transaction.

However, because the block size is only 1 megabyte, transaction fees will increase as users compete to get their transactions into the next block.

Because of these scalability issues, bitcoin has received a program fork or fork, until it split into bitcoin and bitcoin cash.

Bitcoin Cash increases the block size to be able to process more transactions. However, this makes it a matter of accumulating more, to make your business less.

To win this, networks are created. With this system, small transactions can be made by opening a payment channel outside the Bitcoin network (off-chain) and adding it to the Blockchain when the payment channel is approved and closed.

The Lightning Network solves two problems in Bitcoin transactions: speed and fees. Bitcoin transactions take about 10 minutes with each confirmation.

Due to its decentralized nature, Bitcoin transactions require confirmation from a network of nodes spread all over the world, so it takes a long time.

Also read: How to Make Crypto Wallet Easily

How the Lightning Network Works

To use the Lightning Network, you must first run Bitcoin Nodes on Lightning Nodes. Nodes are computers or individuals that program bitcoins and monitor bitcoin transactions.

The difference between Bitcoin Nodes and this system is that Bitcoin Nodes have to verify every transaction on the Bitcoin Network, whereas network Nodes have to verify the validity of the transactions they directly interact with.

Each Lightning Network node has purse Lightning, where users need to deposit/deposit Bitcoin into Lightning wallet.

So, to open a payment channel, users need to pay a certain amount of bitcoins to the payment channel. This system is now suitable for making small bitcoin transactions.

Lightning Network uses a technology called Onion Source and Path. When the express transaction is sent, the computer calculates the best route based on the current network conditions. Then the protocol will encrypt the path to store it.

Also read: How To Make Crypto Coins For Beginners

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