By using real Bitcoin/blockchain transactions and using its native smart-contract scripting language. It is possible to create a secure network of participants which are able to transact at high volume and high speed.
As great as Bitcoin is, even die-hard fans admit it’s not exactly scalable on-chain. Primarily because when the network is used intensively, fees shoot up, with two-figure transaction fees not being unheard of. So, transactions can be quite slow, with an average block time of 10 minutes but it not being impossible to even wait over an hour. Let’s discover why this solution is so important for you to know before the bull run.
What’s the Solution?
That depends on whom you ask but there are two broad categories of solutions:
Changing the protocol by for example going with bigger blocks, a perspective which led to the first Bitcoin community split back in 2017 and the appearance of Bitcoin Cash.
So, scaling off-chain through, you’ve guessed it, the Lightning Network on in our case
To focus on the second option, the main idea is that even a six-digit number of transactions can be processed almost instantly by using a secon-layer solution built on top of Bitcoin.
mainnet has reached 10,000 active channels!https://t.co/sJohipLfV2 #Lightning #LN #bitcoin $BTC pic.twitter.com/9jNzWaVjmt
— Lightning Network statistics ⚡ (@LNstats) July 19, 2018
More specifically, the Lightning Network is a separate entity but interacts with the Bitcoin network. Multiple so-called peer-to-peer channels are created for such payments, with users transferring funds to one another without verifying the transaction on the bitcoin network each time.
So, let’s assume you go on a one-month vacation and eat three times each day at your favorite restaurant. You will basically:
- Create a Lightning Network payment channel with that restaurant.
- Send near-instant transactions at very low fees through it three times daily.
- Close the channel when your vacation ends, with all of those small payments being consolidated as just one transaction, that is broadcasted to the Bitcoin blockchain
Conclusion
The end result? Just one payment on the Bitcoin blockchain for that month as opposed to three per day. Just like with Bitcoin itself, you decide how involved you want to be in this process, from running a full node if you are enthusiastic as well as tech-savvy to simply using a Lightning wallet for the next bull run.
#LightningNetwork https://t.co/Q0CaYRhLWD observed:
16,373 nodes
68,909 channels
4,714.790 BTC capacity ($138,773,813)median node capacity: 0.005 BTC ($147.17)
past 24h:
+18 nodes +249 channels -1.434 BTC ($-42,207)#Lightning #LN #bitcoin $BTC— Lightning Network statistics ⚡ (@LNstats) August 12, 2023
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Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.
