What is the Bitcoin Lightning network?

bitcoin lightning network

In this article, we will explain what the Bitcoin Lightning network is and how it is used.

Scaling the Bitcoin network

Although Bitcoin (BTC) is now the most popular cryptocurrency in the world, in 2008, no one expected it yet. This is the year of the manifesto written by Satoshi Nakamoto, which is taken to be the year the Bitcoin network was founded. A lot has changed since then, and Bitcoin, with its growing number of users, has encountered various problems, including scalability.

What is scalability?

Scalability is a measure of how well a system performs by handling more requests than before. In the case of Bitcoin (BTC), there has been a dramatic increase in the number of users over the past few years. This has resulted in the maximum possible load on the network, thus reducing its capacity. Bitcoin’s scalability problems are mainly due to the use of the Proof of Work algorithm. In this network, one block is never larger than 1 MB. The processing time for one block is about 10 minutes. After this time has elapsed, a so-called consensus occurs, which means that the most likely block is stored in the chain. It is this long processing time per block that makes Bitcoin so hard to scale. Developers are constantly looking for new solutions to deal with this problem. One of these solutions is the Lightning network.

Bitcoin Lightning Network – what is it?

Lightning Network is often associated with a kind of overlay on the Bitcoin (BTC) network. It can also be described as an additional memory where transactions are waiting to be written on the blockchain, i.e. the blockchain. By implementing the Lightning Network, we no longer have to wait for a transaction to be processed. In a nutshell, Lightning Network is a cryptocurrency payment protocol that uses two-way payment channels to perform micropayments, using a P2P (peer-to-peer) system. The aim of Lightning Network is to implement secure and fast payments (security is provided through the use of Smart Contracts, which you can read more about here). 

Analogy between Bitcoin Lightning Network and payment cards

Of course, we are aware that the previous paragraph is hard to understand being only at the beginning of exploring cryptocurrencies. Therefore, we decided to use some analogy with the real world, namely – payment cards. Lightning Network is in fact such a “payment card”, but for the blockchain network. Firstly, a payment card cannot exist without a bank. The same is true for Bitcoin (BTC) and the LN. The Lightning Network cannot exist without the Bitcoin network. Secondly, payment is enforced immediately. In the case of a payment card, specific funds are blocked in a bank account. In contrast, with the Lightning Network, the transaction is stored in memory and waits to be processed, i.e. written to the blockchain. 

DisclaimerBlockbulletin does not take accountability of investments based on the information of the website. We highly advice readers to make extensive research prior to any invest

Share this post

More Guides

It seems we can't find what you're looking for.

Latest News

All articles loaded
No more articles to load


All articles loaded
No more articles to load

Knowledge Base

How to open and use Exodus wallet

The market offers many tools for storing crypto assets. In the article under the title “Cryptocurrency wallets” we explained several tools worthy of attention. One…

Cryptocurrency wallets

We talked about security when trading crypto assets in an article titled “Online security“. We also mentioned how important it is to have an external…

Cryptocurrency hardware wallets

From the article titled “Cryptocurrency wallets” you learned about the different types of wallets. They were briefly characterized there. Let’s now take a closer look…

Which cryptocurrency Brokers to use

In the article “Where to Buy Cryptocurrencies (Exchanges)“, we introduced you to which exchange platforms you can purchase cryptocurrencies on. But you probably know that…

Which cryptocurrency Exchanges to use

In our article titled “Cryptocurrency Trading”, we explained that you can buy or trade cryptocurrencies from both exchanges and brokers. This time we will look…

What is a decentralized exchange DEX?

A Decentralized Exchange, or DEX for short, is nothing more than an exchange without a central regulatory body. So how does a decentralized exchange differ…

Trading cryptocurrency

In the cryptocurrency market, you face many opportunities to invest in cryptocurrency or buy or sell cryptocurrency. If you want to buy cryptocurrency to invest…

Cryptocurrency taxes in Europe

Cryptocurrencies are gaining popularity all the time and are slowly becoming a widely accepted means of payment. As more and more people are interested in…

Online security for cryptocurrency

When trading on cryptocurrency exchanges, we want to feel that our funds are fully protected. You’ve probably heard more than once about the losses traders…

Leveraged trading

The cryptocurrency market moves quite fast and offers the public the opportunity to make a lot of money in a short period of time. Nevertheless,…
All articles loaded
No more articles to load