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Lightning Network: Everything You Need To Know

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Lightning Network,Bitcoin,technology

By now, we’re all familiar with the benefits of blockchain technology.

What you may not know is that efforts to make transactions “easier” and “faster” helped create the Lightning Network.

ZyCrypto indicates that the Lightning Network “is an extension to the Bitcoin protocol” developed in 2015.

Blockchain Scalability Issues

Early adopters believe the decentralized nature of the cryptocurrencies’ underlying technology is the best thing about blockchain.

Clearly, if the number of entities jumping on the “crypto-train” is anything to go by, then blockchain technology is changing the world.

However, early adopters note that the blockchain network is difficult to improve. Scalability problems characterize all the major blockchain networks. The Bitcoin network has shown major sluggishness when it comes to the confirmation of transactions.  In some cases, it might take more than an hour just to confirm one transaction.  The Ethereum network is also victim to this extended transaction confirmation time.

In technical terms, all existing blockchain networks have scalability problems.

Off-shoot of the Chain

The Lightning Network adds an extra layer to the blockchain network.

In fact, according to Ethereum World News:

“Basically, this network acts as an off-chain layer to the Bitcoin blockchain where a batch of transactions can be processed before the underlying general chain or ledger is updated. This has the good effect of boosting the transaction processing speed since the system doesn’t have to update every transaction instance separately.”

Now, the developers working on this technology believe the time for the launching of the prototype has arrived.

For example, CoinGate is at the forefront to adopt the network. Recent reports indicate that the cryptocurrency payment gateway added its 4000 merchants to the Lightning Network. This is a testimony to the positive potential of the new technology. This way, CoinGate seeks to boost the transactional volume of bitcoin. In addition, the new technology endeavors to accelerate the adoption of the cryptocurrencies by the mainstream population.

Direct payment channel and Lightning Network

CoinGate’s Lightning Network pilot program has produced positive results so far.

Interesting to note, the network allows trans-channel payments that do not require the usual hassle transactions go through. A transaction can happen even when the blockchain is not updated.

According to Bitcoin Magazine, the Lightning Network “improves on atomic swaps by connecting… two payment channels.”

Once connected, two parties can carry out transactions between them without really having to demand trust from the each other.

In addition to enabling channel to channel transactions, the Lightning Network can send transactions across different blockchain networks.

Interesting to note, the network works for all blockchain technology.

Litecoin is one of the major altcoins that have put the Lightning Network to use. The platforms enjoy the off-chain capability of this new technology.

Advantages of the Lightning Network

The network provides significant benefits.

One, it improves the usability and scalability of the existing networks.

According to Unblock, the platform adds to the transactional capacity of traditional blockchain networks. It expands the volumes of transactions with an increased “transacting capacity.” The “congestion problem” brought about by the limited nature of the traditional blockchain networks is eliminated.

It’s clear that the additional blockchain layer reduces the congestion on a blockchain network. For instance, the high numbers of customers on the Bitcoin network have seen a sharp increase in the cost of transactions. This is due to the fact that network users who facilitate a cryptocurrency transaction require compensation for their efforts. With the Lightning Network, the off-chain capability reduces the number of users involved since it enables a direct channel-to-channel transaction.

Two, reduced congestion on the platform implies faster confirmation of transactions. Transaction speeds increase while substantially reducing their cost. Market analysts comment that with the Lightning Network, there is a possibility of zero transaction fees. The direct communication of blockchain networks sidesteps the congestion and high fees of a traditional blockchain network.

Limitations

Naturally, there are limitations.

The Lightning Network is no exception.

Commentators argue that the Lightning Network has not seen real market application. As a result, it is impossible to draw conclusions regarding the network’s reliability, security and speed. As a concept, and now advanced prototype by CoinGate, the technology is untested. After subjection to real market rigors, developers will obtain the relevant information to judge the network.

Additionally, evidently only one dApp is created to run on the platform. If the reviews on the applications are anything to go by, the platform is still ambiguous and many users find it “confusing.” This implies that the technology usage is pretty high-level and may require advanced knowledge of blockchain to operate it effectively.

Finally, the security status of the Lightning Network is uncertain at the moment. If the rampant hacking activities target this network, a lot of losses could be reported.

 

 

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