What is Bitcoin Lightning?
The Bitcoin Lightning Network is a "layer 2" payment protocol layered on top of the Bitcoin blockchain. It's designed to enable faster and more cost-efficient transactions by allowing users to create payment channels between any two parties on that extra layer. This network addresses the scalability issues of the Bitcoin network, allowing for a higher volume of transactions and reduced transaction fees.
How Does the Lightning Network Work?
The Lightning Network works by allowing participants to create payment channels between each other. These channels exist off the main Bitcoin blockchain (off-chain).
Once a channel is opened and funded with Bitcoin, transactions can be made between the parties quickly and without the need for blockchain confirmations. These transactions are only settled on the Bitcoin blockchain when the channel is closed, summarizing the total transaction amount.
Bitcoin's Lightning Network also allows for tokenization.
What Are the Benefits of the Lightning Network?
The Lightning Network offers several benefits, including:
Reduced Transaction Fees: Transactions are cheaper because they are processed off-chain.
Increased Transaction Speed: Payments are processed almost instantly, improving the user experience.
Improved Scalability: It significantly increases the transaction capacity of the Bitcoin network.
Microtransactions: The network facilitates microtransactions, which are impractical on the main Bitcoin blockchain due to higher fees.
When was Lightning Network started?
The Bitcoin Lightning Network, conceived in a 2015 white paper by Joseph Poon and Thaddeus Dryja, was developed to tackle Bitcoin's scalability challenges. It aimed to enable faster and more efficient transactions by creating a second layer on top of the Bitcoin blockchain.
Officially launched on the Bitcoin mainnet in March 2018, the Lightning Network has since undergone significant growth, attracting a diverse user base and integrating with various services and applications. This innovative network continues to evolve, promising enhancements in transaction speed, efficiency, and overall scalability, marking it as a pivotal development in the realm of cryptocurrency.
How to Use the Lightning Network?
To use the Lightning Network, you first need a compatible Bitcoin wallet that supports Lightning transactions. Once you have this wallet, you can open a Lightning channel with another party.
Cybrid offers the ability to receive Bitcoin liquidity on the Lightning Network. Contact our Sales department for further information and pricing.