Lightning Network for Faster Bitcoin Payment

in blockchain •  13 days ago

Today, I am going to discuss about Lightning Network. What is Lightning Network, Why Lightning Network exist, how it works and why we need Lightning Network. I will try to cover all these topics here. Lightning network is bit complicated. I recommend to read following post before you read this.

Blockchain: Simple explanation
A short description of Cryptocurrency


Sourse

Now a days, you hardly find any person who does not know about bitcoin. Yes, Bitcoin is revolution invented by Satoshi Nakamoto Why Bitcoin became popular because it is:

  • Permission-less
  • peer to peer
  • Electronic cash
  • Anonymous.

That’s why Bitcoin is the future of our financial system. But the main problem is scalability. Bitcoin network can handle only seven transaction per second and the blocksize is only 1BM. Transaction is slow and expensive. To solve this problem new technology emerged which is called Lightning network proposed by Joseph Poon and Thaddeus Dryja.



Sourse

What is Lightning Network?


Lightning network is a off chain payment protocol which operates on top of blockchain. It allow user sent transactions in a instant manner with low confirmation fees and it store minimum amount of data in blockchain.
Lightning network can not run without Bitcoin network. But Bitcoin network can run without Lightning network.

The Lightning Network is a "second layer" payment protocol that operates on top of a blockchain. It theoretically enables fast transactions between participating nodes and has been touted as a solution to the bitcoin scalability problem

------------Wikipedia

Features of Lingtning Network:

  • Instant Payments
  • Scalability
  • Low Cost
  • Cross Blockchains.
  • Powered by Blockchain Smart Contracts.
  • Micropayments.
  • allow for millions of transactions per second.

Lightning Network Summary
Lightning Network Paper by Joseph Poon and Thaddeus Dryja

How Lightning network works?

Sourse

1. Open a Payment Channels

If you want send payment to your friend, you have to open a payment channel with your friend. It is refer to opening transaction in main blockchain.

2. Funding

Now you both can fund your payment channel using multi-singnature bitcoin address. It act like a lock. It can be unlocked only both parties agree to unlock. Than one can release payment.

3. Exchanging

Now you can exchange payment with certain condition agreed by both parties.

4. Closing channel

Finally this channel can be closed at the of the agreement. Bitcoin blockchain records only two transaction opening and closing, no matter how many transaction took place between these.

As detailed by Elizabeth Stark,

Lightning Network is based on a technology called payment channels. A two-party payment channel is created when both parties create a 2-out-of-2 multi signature transaction on the blockchain, with at least one party committing funds to the 2-of-2 ledger entry. Each person has one private key, and transactions spending from the ledger entry can now be made only if both keys sign. This initial transaction to open a channel takes 10 minutes (or whatever the normal block time is), but afterward the participants can transact with each other instantly using the funds allocated in the the channel. These instantaneous transactions are made by passing signed transactions back and >forth, spending from the 2-of-2 ledger entry.”

Lightning Network Testnet

As per Lightning Lab Tweet: Lightning Network goes live on 15 March 2018.



Some downsides of the Lightning Network:

  • Online only
  • Centralization
  • Too much privacy and anonymity for some purposes

Mainnet Lightning Netowok

Want to use Lightning Network on Bitcoin Test Net? Click below Link:


How to use the Lightning Network.
ref:
https://en.wikipedia.org/wiki/Lightning_Network
https://cointelegraph.com/
https://www.bitcoinlightning.com/
https://www.expressvpn.com/blog/how-to-use-lightning-network/
https://bitfalls.com/2018/04/15/lightning-network-work/
https://99bitcoins.com/what-is-the-bitcoin-lightning-network-a-beginners-explanation/

Thanks for Reading

Authors get paid when people like you upvote their post.
If you enjoyed what you read here, create your account today and start earning FREE STEEM!
Sort Order:  

Hi i gave you an upvote dont forget to follow me for future upvotes & i always follow back
fb/john.thephotoeditor.56

Congratulations! This post has been upvoted from the communal account, @minnowsupport, by r060x from the Minnow Support Project. It's a witness project run by aggroed, ausbitbank, teamsteem, theprophet0, someguy123, neoxian, followbtcnews, and netuoso. The goal is to help Steemit grow by supporting Minnows. Please find us at the Peace, Abundance, and Liberty Network (PALnet) Discord Channel. It's a completely public and open space to all members of the Steemit community who voluntarily choose to be there.

If you would like to delegate to the Minnow Support Project you can do so by clicking on the following links: 50SP, 100SP, 250SP, 500SP, 1000SP, 5000SP.
Be sure to leave at least 50SP undelegated on your account.