Bitcoin’s blockchain lacks scalability.
Visa and other payment processors handle 2000 per second on average, while Bitcoin can only process seven transactions per second.
The Lightning Network is an effort to solve this scalability issue.
The Lightning Network Explained
The idea behind the Lightning Network is that small, everyday transactions do not need to be stored on the main Bitcoin blockchain.
So basically, the Lightning Network is a second layer built on top of the main blockchain. It enables users to make fast micro-transactions using “off-chain” payments. Off-chain transactions with the Lightning Network only involve two entries on the main blockchain — one to open a private payment channel and the other one to close it. A private payment channel enables two parties to make transactions off-chain. The integrity of the payment is maintained by using the signature of both parties to close the channel.
Multiple Parties in the Lightning Network
Besides allowing off-chain transactions between two parties, the Lightning network allows networking as well. This enables the use of multi-sig accounts to make transactions between more than two parties.
Thanks to this effect, everyone in the network can make transactions off-chain. The benefits are many — from the reduced fees to the higher speed of transactions.
Scalability has been one of the most significant problems in public blockchains. The Lightning Network is one of the efforts to tackle scalability issues by helping relieve the main blockchain. The Lightning Network is an excellent initiative for the oldest blockchain in existence. The new coins such as Quras use the latest technology that enables them to be highly scalable.
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