• Disclosure
  • Privacy Policy
  • DMCA Policy
  • CCPA
  • Medical Disclaimer
Friday, March 31, 2023
Johnson County News Online
  • Home
  • News
  • Business
  • Technology
    • Crytpocurrency
    • Gaming
    • Gadgets
  • Sports
  • Health
  • General
    • Business Services
  • Travel
  • Press Releases
  • Popular
No Result
View All Result
  • Home
  • News
  • Business
  • Technology
    • Crytpocurrency
    • Gaming
    • Gadgets
  • Sports
  • Health
  • General
    • Business Services
  • Travel
  • Press Releases
  • Popular
No Result
View All Result
No Result
View All Result
Home Technology Crytpocurrency

Be[In]Crypto Video News Show: The Lightning Network – BeInCrypto

by NewsReporter
April 14, 2022
in Crytpocurrency
be[in]crypto-video-news-show:-the-lightning-network-–-beincrypto
Share on FacebookShare on Twitter

In this episode of Be[In]Crypto’s Video News Show, host Juliette Lima explains Bitcoin’s popular Layer-2 payment solution, the Lightning Network.

While Bitcoin usage has increased dramatically, this has come with a subsequent uptick in transaction times and fees. At a lackluster seven transactions per second, Bitcoin’s network is effectively inefficient for making payments. 

This is because all Bitcoin transactions must be broadcast to every single node within the network. Once broadcasted, the transactions still need to reach their final settlement on the Bitcoin blockchain.

With the blockchain creating new blocks about every 10 minutes and the blocks limited in size, this process is rather time-consuming. Also, with the limited number of transactions that can be settled per block, the fees are prone to rising substantially, with participants jostling for priority.

Lightning Network

This is where the Lightning Network comes in. Conceived by Joseph Poon and Thaddeus Dryja in 2015, the Lightning Network is a second-layer protocol that sits on top of the Bitcoin network.

Its inventors used the concept of payment channels to help combat the scalability issues surrounding Bitcoin, optimizing the speed of on-chain bitcoin transactions, as well as the cost per transaction. 

Currency as Layer-2

If second-layer protocols are unfamiliar, here is an analogy. Consider gold as a first-layer form of money. Despite possessing several valuable qualities, such as scarcity, durability, and fungibility, its weight precludes its portability. In the past, a solution was to use paper receipts, which effectively represented a certain amount of gold kept in safe custody. 

People trusted they could take this paper to the bank and exchange it for gold. Eventually, these paper receipts evolved into currencies, such as the U.S. dollar. The convenience of the paper bills made transactions much easier, and they could occur much more frequently. 

One could think of paper currency as a second layer on top of the first layer of the gold standard. Bitcoin and the Lightning Network function in much the same way as gold and paper currency.

Trade-offs

In the case of Bitcoin, a choice was made to optimize for security and decentralization, with transaction speed being sacrificed. This ultimately led to a highly variable transaction fee as well, depending on the demands on the network. These two points make it difficult for Bitcoin payments to be made on-chain, especially in smaller every day increments.

The Lightning Network effectively relieves Bitcoin of these payment duties and is instead optimized for high speed and low cost, eventually finalizing transactions using Bitcoin on the main chain.

Bitcoin payment channels

The Lightning Network works by setting up a channel for payments between two separate parties, called a funding transaction. Both parties fund the channel with on-chain bitcoin, creating an on-chain arrangement between the two. These funds are the maximum channel capacity, you cannot spend more than the total of these funds combined.

This funding transaction, the initial channel opened up between two parties, uses something called a multi-signature address, which means more than one signature is needed to move the Bitcoin held in that address. For example, in a 2-2 multi-signature address you would need the 2 people to agree to sign for the funds at that address for it to be spent. 

Paying the tab

In this payment channel on the Lightning Network, only the first and the last transactions are put on the bitcoin blockchain. All the other transactions between the opening and closing transactions will happen off-chain, meaning off of the Bitcoin blockchain. These transactions between the first and the last are called commitment transactions, and they are not limited by the Bitcoin protocol fees or transactions per second. 

An equivalent process would be opening a tab at a bar. Instead of paying for each drink individually throughout the night, which takes more time, and costs the establishment more money in transaction fees, an initial tab, or payment channel is opened and updated after each drink is ordered. The tab is then settled at the end of the night with a single transaction. Closing a bar tab is similar to closing a payment channel in the Lightning Network.

Other Lightning Network benefits

With the Lightning Network, payments can be routed through multiple channels to any of the network participants. For instance, if a payment needs to be made to someone, but a direct channel is lacking, it could still be routed through another participant in the network.

The Lightning Network’s speed also enables micropayments, where payments can be made incrementally based on periods of time. Service providers could now charge by the minute rather than through monthly subscriptions, or employers could pay almost instantaneously for work performed rather than through weekly paychecks.

As benefits to using the Lightning Network accrue, its users have also increased dramatically. As of writing, there are currently around 36,000 nodes on the Lightning Network with a network capacity of 3,600 BTC.

Wallet options

There are many wallets out there, with both custodial and noncustodial options, that facilitate Lightning Network payments. Some of the best are Strike, Bluewallet, Cash App, and Muun.  

One important thing to note is that Lightning QR codes are somewhat different from on-chain Bitcoin QR codes. Some new wallets enable switching between on-chain Bitcoin and Lightning Network Bitcoin, but erroneous transactions are often due to being sent to the wrong kind of address.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

Related Posts

crypto-crunch:-the-latest-news-in-blockchain,-cryptocurrency,-and-nfts:-april-14-19,-2022-–-innovation-&-tech-today

Crypto Crunch: The Latest News In Blockchain, Cryptocurrency, And NFTs: April 14-19, 2022 – Innovation & Tech Today

by NewsReporter
April 14, 2022
0

Another exciting week in the world of cryptocurrency and NFTs has arrived! In this week’s Crypto Crunch, I talk about some of the most exciting news and developments sweeping across the industry and globe, including but not limited to: Robinhood Adds Four New Cryptos To Its Platform, UFC Bonus Payouts in Bitcoin, NFT...

stablecoins-see-growth-with-crypto-market-stuck-in-‘bearish-lull’-–-cryptonews

Stablecoins See Growth With Crypto Market Stuck In ‘Bearish Lull’ – Cryptonews

by NewsReporter
April 13, 2022
0

Source: AdobeStock / AdriaVidalA “bearish lull” in the crypto market fuelled growth in stablecoins, with the market capitalization of the top five stablecoins growing by 13% in the first quarter, according to a new report from the coin tracking site CoinGecko.The growth in the market capitalization of stablecoins is notable...

justin-bieber,-gwyneth-paltrow-and-ashton-kutcher-are-among-dozens-of-celebrity-investors-piling-into-crypto-startup-moonpay-–-cnbc

Justin Bieber, Gwyneth Paltrow And Ashton Kutcher Are Among Dozens Of Celebrity Investors Piling Into Crypto Startup MoonPay – CNBC

by NewsReporter
April 13, 2022
0

MoonPay CEO and co-founder Ivan Soto-Wright speaking at the Bitcoin 2021 conference in Miami, Florida.Eva Marie Uzcategui | Bloomberg | Getty ImagesWhat do Justin Bieber, Gwyneth Paltrow, Snoop Dogg and Ashton Kutcher all have in common? Aside from being A-list celebrities, they're among more than 60 new investors in fintech...

us-record-holding-astronaut-scott-kelly-drops-first-ever-nft-to-support-ukraine-–-cryptonews

US Record-Holding Astronaut Scott Kelly Drops First-Ever NFT To Support Ukraine – Cryptonews

by NewsReporter
April 12, 2022
0

Scott Kelly, 'Dreams Out of this World'. Source: orangecomet.comUkraine’s courageous fight against Russia’s invasion continues to inspire efforts across the cryptosphere and beyond, with former NASA astronaut Scott Kelly officially dropping his first-ever non-fungible token (NFT) to aid the Ukrainian war effort.The piece, 'Dreams Out of this World’, is rolled...

Johnson County News Online

© 2021 Johnson County News Online

Navigate Site

  • Disclosure
  • Privacy Policy
  • DMCA Policy
  • CCPA
  • Medical Disclaimer

Follow Us

No Result
View All Result
  • Home
  • DMCA Policy
  • Medical Disclaimer
  • Privacy Policy
  • Disclosure
  • CCPA
  • Terms of Use

© 2021 Johnson County News Online

We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept All”, you consent to the use of ALL the cookies. However, you may visit "Cookie Settings" to provide a controlled consent.
Cookie SettingsAccept All
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checkbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT