Summary:
The Bitcoin base layer and the Lightning Network serve complementary purposes—on-chain is ideal for large, secure settlements, while Lightning is optimized for speed and scalability.
Details:
Bitcoin on-chain transactions are finalized directly on the blockchain, offering maximum security and decentralization but limited speed and higher fees. This makes them ideal for large transfers, custody changes, or long-term settlement.
Lightning transactions, by contrast, are off-chain, instant, and inexpensive. They’re designed for frequent, small payments like tips, purchases, and streaming income. By leveraging both layers, users can optimize for cost, speed, or security depending on their needs.
Key Features:
- On-chain: High security, slow speed, high fees—ideal for settlement.
- Lightning: Low security per payment, instant speed, minimal fees—ideal for volume.
- On-chain records are permanent and public; Lightning is private and ephemeral.
- Combined use allows for flexible financial architecture.