Summary:
The Lightning Network is a second-layer solution built on top of Bitcoin that enables fast, scalable, and low-cost transactions through off-chain payment channels.
Details:
While Bitcoin’s base layer is designed for security and decentralization, it’s not ideal for small or frequent transactions due to limited block space and confirmation times. The Lightning Network solves this by allowing users to transact off-chain using peer-to-peer channels. Only the opening and closing of these channels are recorded on the blockchain.
Lightning dramatically increases Bitcoin’s transaction throughput and enables use cases like tipping, streaming money, and instant micropayments. It is fundamental to making Bitcoin viable for everyday payments.
Key Features:
- Enables high-speed, low-fee payments without confirmations.
- Opens the door for Bitcoin to scale to millions of users.
- Ideal for real-time, interactive payments (e.g., games, chats, tips).
- Built on Bitcoin’s base layer, maintaining security and finality.