Bitcoin is a reliable but slow network: ~7 transactions per second, high fees, especially at peak times.
The solution? Lightning Network is a second layer (L2) that enables instant and cheap BTC payments.
What is the Lightning Network?
Lightning Network (LN) is a network of state channels built on top of the Bitcoin blockchain.
It allows users to exchange BTC off the main network while maintaining Bitcoin's security.
How LN works:
1. Opening the channel:
Two users lock BTC in a smart contract (multisig) on Bitcoin. This is the first and only on-chain transaction.
2. Payment exchanges:
Users send BTC to each other off the chain, updating balances through digital signatures.
3. Closing the channel:
The final state is sent to the main blockchain — funds are distributed.
Advantages of the Lightning Network:
Instant payments.
Fees are a fraction of a cent.
Privacy: data is not published on the blockchain until the channel is closed.
Support for micropayments: you can send $0.001 — the Bitcoin mainnet doesn't allow that.
Risks and limitations:
A channel needs to be opened and closed, which requires on-chain transactions.
Routing issues: if there are few channels or they are not connected — the payment may fail.
So far, not all wallets support LN.
If one participant tries to cheat — monitoring is required and a 'penalty' transaction must be submitted.
Where Lightning Network is already used:
Payment applications: Strike, Wallet of Satoshi.
In countries with hyperinflation (e.g., El Salvador) — as an alternative to the banking system.
Online services accepting pay-per-use, micro-donations, and tips.
Conclusion:
The Lightning Network is a real way for scalable and everyday use of Bitcoin. It's not perfect yet, but it already works, and the potential is huge.
