What Is the Lightning Network?

The Lightning Network is a network of payment channels, which operates on top of a blockchain. The LN establishes bidirectional payment channels between users who are united into a single network.

In a payment channel, there are main (opening and closing) transactions and secondary (the rest) transactions. Opening and closing transactions are recorded on the blockchain. Secondary transactions occur only inside the Lightning Network.

The LN’s advantages are instant payments, scalability, and low cost.

The Lightning Network was designed by Joseph Poon and Thaddeus Dryja in 2016, but the active test and launch phase began only at the end of 2017.

To date, apart from Bitcoin, among the networks working on the practical implementation of the LN or similar off-chain solutions are Litecoin, Zcash, Ethereum, and Ripple. Also, in late January, the Stellar developers announced the plan to add the Lightning Network to improve the Stellar’s security and increase its throughput.