That’s why Blockchains are slow, and therefore, expensive for everybody to start using. Ideally, the adoption of Blockchain would mean more transactions happening but as the number of transactions goes up, the network will become slow, making a hurdle for adoption. What a paradox!
This is why blockchain is very slow and also very expensive for people who are just starting to use it. Theoretically, the popularity of blockchain will mean more transactions happening. And as the number of transactions rises, the network becomes slow, hindering adoption. What a paradox!
Lightning Network (LN) is a potential solution to the problem.
Lightning Network (LN) is a potential solution.
3.So what is Lightning Network again?
3.So, what is the Lightning Network?
“Thunder is good, thunder is impressive; but it is lightning that does the work.” — Mark Twain
"It's nice to have thunder, the thunder is impressive, but it's the lightning that's doing the job" - Mark Twain.
The idea behind LN is that not all transactions are required to be recorded on the Blockchain.
The concept behind the Lightning Network is that there is no need for all transactions to be recorded on the blockchain.
Imagine you and I transact quite a few times among ourselves. In such a case, we can bypass recording the transactions on the Blockchain and carry them off the chain.
Imagine how many times I've traded with you. In this case, we can bypass recording on the blockchain and execute off-chain.
In the simplest terms, how it’ll work is — we’ll open something called a payment channel between us and record its opening on the Blockchain. Now, you and I can transact any number of times through this payment channel and it can stay open for any number of hours, days, weeks or decades. The only time we would touch the Blockchain ever again will be when we would want to close the channel. Then, we’ll write the final status of the transactions that occurred through the channel on the Blockchain.
Explain in the most layman's terms how it works - a payment channel is opened between us and then recorded on the blockchain. Now, I can transact between you and I through this payment channel any number of times, and the channel can exist for any length of time, hours, days, weeks or decades. The only time we need to use the blockchain is when we want to close the channel. Next, we write down the final transaction in the channel on the blockchain.
Using this idea of payment channel, we can create a network of payment channels such that it would be only rarely required to transaction on the Blockchain. Imagine there are three characters — Xan, Yelena and Zeke.
With this concept, we can create a network of payment channels so that few transactions can be made on the blockchain. Suppose now there are three people - Xan, Yelena and Zeke.
If Xan and Yelena have a payment channel opened between them and Yelena and Zeke have a payment channel opened between them, then Xan can send money to Zeke via Yelena.
Suppose Xan wants to send 2 BTC to Zeke, Yelena will send 2 BTC to Zeke and Xan will reimburse Yelena with 2 BTC.
If there is a payment channel between Xan and Yelena, and a payment channel between Yelena and Zeke, then Xan can pay Zeke through Yelena.
That’s what the idea of Lightning Network is. Because you won’t be touching the Blockchain often, the transactions will be happening at lightning speed. As you might have guessed by now, all the magic happens in the payment channels. Let’s learn the magic trick then.
This is the concept of the Lightning Network. Because the blockchain won't be used often, transactions will want to be as fast as lightning. As you may have guessed, all the magic happens on the payment channel. Next, let's get to know it.
4.And what are those payment channels?
4.What exactly are these payment channels?
“Individually, we are one drop. Together, we are an ocean.” — Ryunosuke Satoro
"As individuals, we are like a drop of water. Gathered together, we are the ocean. "-Ryunosuke Satoro
It’s like a safety deposit box where two people deposit equal amounts of money and each put a lock on it.
It is like a safe deposit box where two people deposit equal amounts of money and lock it.