Everything you need to know about Lightning Network (LN)
Public ledgers are valuable because they are self-auditing. However, doing so means sacrificing speed for decentralization and security.
The more decentralized a network is, the more robust it is.
As such, decentralization tags scalability troubles. This explains why Bitcoin can only process 7 TPS while Visa does over 2k TPS.
From low processing speeds, the network also becomes more expensive.
Yes, Bitcoin users can sometimes pay up to $30 per transaction—unreasonable, right?
But Bitcoin developers are trying to find a way out to enhance scalability and drastically chop down fees.
The Lightning Network (LN) is one means.
LN is a layer-2 payment layer on Bitcoin and Litecoin networks.
That means, through LN channels, people can send transactions between each other without paying fees. In addition, because they are 'off-chain,' thousands of transactions can be processed at a go.
LN tests show that these channels can process one million transactions every second. So, for a layman, LN is a solution that will allow users to pay for coffee using BTC because of immediate settlement.
Accordingly, if LN is widely adopted, the Litecoin and Bitcoin networks would be rapidly scaled.