Lightning Network is a second-level protocol that operates on top of a Bitcoin blockchain. The developers of the main cryptocurrency payment network offer it to increase the speed of transactions. The relevance of technological solutions caused by the growing interest in digital money. The increase in the total volume of operations has led to the need for system scalability.

Lightning Network is one of the solutions proposed by the developers. The essence of innovation in conducting transactions outside the Bitcoin blockchain, which reduces the load on the network. Lightning allows you to create instant two-way channels that link customer accounts. The task of smart contracts is to define the responsibilities of each of the parties. In this case, the blockchain does not record information about the ongoing operation until the moment of the transaction.

Benefits of Lightning

Bitcoin holders receive the following benefits:
• Minimum fee;
• High working speed of transactions;
• Potential for expansion of the payment system;
• Thanks to the implementation of the Lightning Network, operations between blockchains become relevant. Atomic swaps eliminate the need for intermediaries.

Functioning Skills of LN

You can compare the principle of operation of Lightning Networks with a bank credit account used for conducting microtransactions. Financial operations are carried out outside the blockchain directly between the parties to the transaction. Information about the transfer is eventually recorded in the distributed registry. The payment channel generates a MultiSig wallet, where a fixed amount of cryptocurrency is sent. In addition, the Bitcoin address of the user on the blockchain is entered in it.

The use of the payment channel allows two users to perform any number of transactions that are not displayed in the distributed registry. Upon completion of the transfers, the total balance of two clients is entered in the blockchain. Each party receives a specified number of tokens to their wallet. Lightning Network does not offer an unprecedented level of security that the blockchain has. But its clear advantages will help technology to become widely used in the cryptocurrency world. It is recommended to use Lightning when conducting small transactions, which will reduce the load on the blockchain and help to scale the Bitcoin network.