Introduction
If you’ve been following Bitcoin for the past few years, you’ve probably heard about the “lightning network.” It’s a way for people to send each other bitcoins without having to worry about paying fees or waiting for confirmations. But what is this lightning network and how does it help bitcoin? And why do we need a new coin when we can use bitcoin itself? In this article, I’ll answer those questions and more.
What is lightning network?
The lightning network is a way to improve the scalability of bitcoin transactions. It’s essentially a payment channel that allows users to make many transactions off-chain, which means they don’t need to be added to the blockchain every time someone makes a purchase or payment. Theoretically, this could help Bitcoin scale up enough so that it would be able to handle millions or even billions of users at once–but only if people actually use it!
Lightning Network is also just one layer on top of Bitcoin; there are other layers like SegWit (Segregated Witness) that have been added recently as well.
How does lightning network work?
The lightning network is a way to move bitcoin transactions off the blockchain. As you know, every bitcoin transaction is recorded on the blockchain, which is a public ledger of all bitcoin transactions ever made. This means that each time you send or receive bitcoins (or do anything else with them), your identity and location are attached to that transaction forever. This has some benefits but it also has some downsides:
The good news is that this transparency gives us confidence in our system because we can see exactly how much money everyone has at any given moment–and this helps prevent fraud or theft! The bad news is that recording all those transactions takes up space on computers around the world as well as processing power required by miners who verify them every 10 minutes or so (more on this later). And because miners earn new bitcoins as compensation for their work validating transactions and adding them into blocks on top of previous blocks of data known collectively as “chains,” there’s incentive for them not just record everything accurately but also keep doing so over time rather than quitting after one block has been added because then no one would trust anything about what happened before then anymore either!
Why does a lightning network need a coin of its own?
The lightning network is a payment protocol that uses Bitcoin as an underlying blockchain to operate. It’s not dependent on Bitcoin, but it requires users to pay the fees required to send transactions over the network.
The reason why there needs to be a coin of its own is because this separate currency will be used as a way of paying those fees (called “payment channels”). In order to make sure they get paid, you need some kind of token that can only exist within the ecosystem–otherwise people would use whatever currency they want!
Is there potential for problems with the lightning network?
Lightning Network is still in beta and it’s not clear how disputes will be resolved. The Lightning Network is still a work in progress, so there are privacy concerns. However, if you have a good understanding of Bitcoin and want to learn more about the technology behind it, then you can sign up for an account with Coinbase (https://www/coinbase) or Bitstamp (https://www/bitstamp).
The lightning network is a way to improve the scalability of bitcoin transactions.
The lightning network is a way to improve the scalability of bitcoin transactions. It’s a system of payment channels that allows for fast, cheap transactions. The idea behind it is simple: if you want to send money to someone else, instead of broadcasting your transaction across the entire blockchain (and waiting for it to be confirmed), you can open up a new channel between yourself and them, make your transfer there, then close that channel when you’re done–all without touching any other part of Bitcoin’s public ledger system at all.
The result is something like an instant bank transfer made possible by dozens or hundreds of different banks agreeing not only on what they’re doing with their own money but also coordinating their efforts so no one else can interfere with those transactions while they’re taking place.
Final Thoughts
The lightning network is a way to improve the scalability of bitcoin transactions. It’s still in its infancy, but it has the potential to solve some of the problems that have long plagued cryptocurrency as a whole.
