Lightning Network

The Lightning Network is a decentralized layer 2 payment protocol layered on top of the Bitcoin network that makes bitcoin (BTC) better by transacting off-chain, or outside of the Bitcoin network.

Blockstream, a blockchain technology company, based in Victoria, British Columbia, Canada, officially released the Lightning Network in 2018.

The Lightning Network depends on the underlying Bitcoin core code that runs the Bitcoin blockchain.

It creates a secure network between participants using real bitcoin transactions.

By using a native smart-contract scripting language, Lightning Network is able to process bitcoin payments instantly, without having to worry about block confirmation times.

It can handle billions of transactions per second across its network, providing near-instant financial transactions between platforms and wallets using it together.

New blocks are added to the network every minute, instead of Bitcoin’s 10-minute block time.

Since the processing is done off-chain, the Lightning Network allows for super low fees when compared with the Bitcoin network’s fees.

The Lightning Network can also offer cross-chain atomic swaps, happening off-chain instantly.

Related Terms

Genesis Block

The very first block or first few blocks recorded on a blockchain or blockchain-based protocol. The genesis block is often called Block 0 or Block 1. The genesis block sets the foundation for the rest of the blocks that are added to form a chain of blocks. That’s where we get the word “blockchain”. The most famous genesis block, and the very first Bitcoin block, called the Genesis Block, was created on January 3rd, 2009, by Bitcoin’s infamous and mysterious creator, Satoshi Nakamoto. Some consider this date to be the start of the cryptocurrency revolution – the start of it all!

Bitcoin (BTC)

Bitcoin (BTC) is most well known as a digital decentralized cryptocurrency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer Bitcoin network without the need for intermediaries, such as payment gateways or banks or routing services. Think of bitcoin as Internet money, that you can send and receive directly, to and from anyone, and you can use it to pay for stuff.

Off-Chain

Refers to blockchain transactions that are processed outside the blockchain. Due to the limitations of on-chain transactions, including a blockchain’s scalability, speed, and cost, off-chain transactions and Layer 2 protocols were introduced to help Layer 1 blockchains deal with congested networks and slow processing speeds.

Blockchain

Blockchain networks are at the heart of cryptocurrencies. A blockchain is a database, or digital ledger, made up of a series of interconnected blocks containing transaction data created on the network over some period of time. Each block in a blockchain also contains a unique identifier unlike any other block in the chain called a hash. Think of the hash as a fingerprint identifying that block for all other blocks. Distributed ledger technology (DLT) is another name frequently used in relation to blockchains.

Immutability

A core feature of blockchains that makes their ledgers, the data record of transactions, unchangeable and unalterable. Immutability drives the trustworthiness and integrity of blockchain data as chain transactions and rulesets are protected from fraud, hacking and other wrongdoing.