In this article we will try to explain the Bitcoin lightning network system working procedure with example, So that everyone can understand the reality about the Bitcoin lightning network instead of getting confused with multiple complicated terms.
What Is Bitcoin Lightning Network?
A technique which is used to make the Network of Bitcoin more faster to make payments is known as Bitcoin Lightning Network.
Alternatively we can say Bitcoin Lightning Network is a trick that helps Bitcoin users to make faster and safer payment with less possible transaction fees amount.
In Bitcoin Lightning Network transaction fees remain very low and also we don’t need for the confirmation of the transaction.
Bitcoin lightning network makes Bitcoin to use in practical life with more ease.
Usually people choose those payment options which are faster and safer. Here Bitcoin is safer but not faster from the point of confirmation of transaction. No one shopkeeper will wait for the confirmation of a Bitcoin transaction, So why would any shopkeeper or customer prefer to use Bitcoin or another cryptocurrency?
So to solve this problem of confirmation and high transaction fees , this technique of lightning network was introduced by the developer team of Bitcoin.
Actual Need Of Lightning Network In Bitcoin
Irreversibility of a transaction is trusted by the numbers of confirmation, which is a time consuming part of a crypto transaction.
Since a believer in cryptocurrency technology can accept payment without taking much tension about the number of confirmation.
But not every person can accept without confirmation.
So to solve this problem a Lightning network concept was introduced.
In the starting phase of Bitcoin, 7 transaction per second was possible. In the very beginning not many people were using Bitcoin, so this speed of 7 transactions per second was enough. But after time to time mass adoption of Bitcoin made Bitcoin transactions slower to confirm and transaction fees high. Because after Bitcoin popularity people started doing transaction in bulk amount and this results into a big problem for Bitcoin Team.
To overtake fiat currency payment by Bitcoin, it was necessary for Bitcoin to become more faster than fiat transaction.
7 transactions per second is a very low scalability factor in present time because in fiat currency system we have a scalability factor of 2500 transactions per second. Which is very high in comparison with Bitcoin scalability of transaction speed.
How Bitcoin Lightning Network Works?
In the Bitcoin Lightning Network we need a seed address which accepts multi signature verification.
To understand the working procedure of Bitcoin Lightning Network let’s take an example of a coffee shop which has a regular customer named John.
If John and Coffee shop wants to make Bitcoin transactions with high confirmation speed and want to spend very low possible fees then they will create multi-Signature seed and then Mr John will deposit 0.01btc and Coffee shop will deposit 0.00btc. Now when Mr. John will buy coffee from the coffee shop then the Coffee shop will accept payment through Multiple signature seed wallet with a simple confirmation option by John.
This transaction will not involve the main blockchain algorithm of Bitcoin. It will remain in written secured data form. And both of these people can do transactions with more very high speed without giving load to the main blockchain block.
Alternate Of Lightning Network
Since there is no alternate option of Lightning Network technique but still there are few options which can help us to choose alternate options.
To make transactions in a multi-Signature seed wallet system, we need to create a simple Setup between two people. Where two people have trust with each other.
Alternative to Lightning Network, we can use Bech address based Bitcoin wallet. In the bech address system, we don’t need to pay high fees.
But a problem associated with the Wallets which associated with bech address is limited number of users.
Most of the Cryptocurrency Exchange don’t support bech address.
But still here we have freedom with the wallet which supports bech address. We can do transaction to any type of the address format at low cost.
Recently a cryptocurrency project named Solana Coin entered in cryptocurrency market with very low fees and high scalability factor of 50k tps. Read more about this project here
Advantage Of Bitcoin Lightning Network Concept
Bitcoin Lightning Network is really a cool idea to remove the load from the main blockchain algorithm of Bitcoin but still most of the people are not ready to use a multi-Signature wallet system because people don’t want to take tension in such types of things which are new for them.
But here we can’t ignore the advantage of Bitcoin lightning network technology.
- Bitcoin Lightning Network reduces the load from the blockchain of Bitcoin.
- Transactions are much faster than normal wallet to wallet transactions.
- No need to take tension about the number of confirmation.
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