What Is the Bitcoin Lightning Network? ๐จ This article is 6 years old...
What Is the Bitcoin Lightning Network?
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Updated: May. 25, 2023 at 2:14 am UTC
Photo by Max Bender on Unsplash
The Lightning Network is an open protocol layer that leverages the power of blockchain and smart contracts to enable instant payments across a network of participants.
The Lightning Network enables instant payments at exceptionally, low fees with millions to billions of transactions per second, and cross-chain atomic swaps. The Lightning Network could potentially allow for Bitcoin transactions to take places instantaneously, hence the reason it has been hailed as the scaling solution for Bitcoin.
About the Lightning Network
Off-chain transactions are the primary concept behind the Lightning Network which means every transaction does not need to be recorded on the blockchain,.
For example, Hal and Nick frequently exchange payment transcations. Hal and Nick open up a payment channel and record the opening of the channel on the blockchain or the base layer.
Hal and Nick can transact as many times as necessary with very insignificant transaction fees. The only time they need to touch the base layer is when they want to close the channel, which they will record the final standing of the channel on the blockchain.
According to 1ML on Oct. 28 at 9:15 PM EST, there were 3,877 nodes and 11,706 channels on the Lightning Network. The average node capacity is 0.067 BTC or $429.36, while the average channel capacity is 0.012 BTC or $78.80. There is on average 10.90 channels per node. The average node age is 130.3 days, while the average channel age is 73.6 days. The median base fee is $0.000064443.
Who is Behind the Lightning Network?
The Lightning Network is being developed by Lightning Labs, a San Francisco-based software development company building the next generation of decentralized financial infrastructure.
Participants in Lightning Labs March 2018 $2.5 million seed round included Digital Currency Group, Twitter & Square CEO Jack Dorsey, Litecoin Creator Charlie Lee, Craft Ventures, David Sacks, Ben Davenport, Kevin Hartz, Tikhon Bernstam, Bill Lee, The Hive, and Jacqueline Reses. Elizabeth Stark and Olaoluwa Osuntokun founded Lightning Labs in 2016.
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Bitcoin
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Jack Patrick Dorsey, born on November 19, 1976, is a testament to the American dream of innovation and entrepreneurship.
Charlie Lee stands prominently in the cryptocurrency community as the founder of Litecoin and currently holds the position of Managing Director at the Litecoin Foundation.
Elizabeth Stark is an American entrepreneur and educator.