Lightning Network is a blockchain-based payment procedure. Instant transactions are possible through the use of the lightning network. This exceptional tool which was designed by Satoshi Nakomoto, was developed by integrating a certain number of building blocks required for a swift transaction. In 2015, Joseph Poon and Thaddeus Dryja, two young programmers modified the original design of Satoshi by incorporating the idea of a decentralized network founded on the lightning fast transactions.
Recently, Bitcoin has integrated the Lightning Networks into its blockchain. This will prove through the enhancement of the value, general acceptance and the security associated with the Bitcoin blockchain. It will also be evident with a high reduction of fees charged for transactions and the transactions performed per second is also expected to be boosted.
How the Lightning Network Works
The blockchain technology is the backbone of the lightning network. It produces an environment that supports high volume transactions at remarkably high speed by the use of real blockchain transactions and smart contract scripting language.
The general features of the lightning network includes:
Bi-directional Payment Channels: The disbursement of funds or the payments for transactions can only be authorized by the parties who have generated a ledger entry in the blockchain. This also helps to allocate funds to the participants for transactions created in the ledger entry. However, this remains undisclosed to the rest of the blockchain.
Lightning Network: This feature provides the avenue to locate a path on the network that has be created by a two-user ledger entry.
Blockchain as Intermediary: With the use of passable scripts and transactions, transactions that are started off the blockchain can now be implemented on the blockchain. This serves as an execution of the smart contracts on the blockchain which amounts to a realistic output.
The integration of lightning network into the bitcoin blockchain network has boosted most of the operations in the network, thus providing an enhanced and high performance blockchain network. The improvements on the bitcoin blockchain by the Lightning Network include:
Decreased Costs: With the lightning network, transactions are handled off the blockchain and this implies that the transaction fees charged are minimum. This also serves as a means for the occurrence of micropayments.
Prompt Payments: Payments for transactions implemented under the Bitcoin blockchain can now be achieved instantaneously. The use of smart contracts will also boost the activities in the blockchain and the transaction speed is also increased.
Cross Blockchains: There is instant atomic swaps between different bitcoin blockchains and this can be done even off-blockchain. Transactions are also executed without the disturbance of a third party.
Scalability: With the lightning network, there is high scalability in the bitcoin blockchain. Over a million transactions can now be performed per second.
This lightning network upgrade by the Bitcoin blockchain will enable the crypto coin to function effectively as a currency, the value and security will be improved. This is an outstanding milestone as it will also encourage the use of bitcoin as a medium of payments globally.