Layer-2 solutions like the Lightning Network enhance Bitcoin’s (BTC) scalability by processing transactions off-chain while leveraging BTC’s security. BTC’s blockchain handles 3-7 transactions per second (TPS), limited by its 1MB block size. The Lightning Network creates payment channels, allowing near-instant, low-cost transactions, settled later on the mainchain. This boosts BTC’s TPS to thousands, making it viable for microtransactions. Similar layer-2 solutions exist for $LTC
Litecoin (LTC), which also supports Lightning, and$POL
Polygon (MATIC), which scales Ethereum. Lightning reduces fees and congestion, preserving BTC’s decentralization by keeping the mainchain lean. However, it requires users to lock funds in channels, reducing liquidity, and channel management can be complex. MATIC’s rollups offer comparable scalability benefits but differ in implementation. LTC’s faster block times complement Lightning’s efficiency. While Lightning enhances usability, it faces challenges like channel security and centralization risks in hub-dominated networks. Still, it’s a game-changer for BTC’s adoption.