Learn more about Bitcoin’s Lightning Network technology

by
Gregory Pudowski

Posted: November 14, 2024 11:31 AM Updated: November 14, 2024 11:31 AM

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Bitcoin. Rushing to $90,000. The name is Decentralized Revolution… It results in frustratingly slow and expensive transactions. Although Bitcoin’s core technology is clearly revolutionary, scalability has long been a major obstacle. Join the Lightning Network: the game changer that will bring Bitcoin to the mainstream and redefine finance.

Forget the technical stupidity. The Lightning Network is not just a layer 2 solution. A high-speed rail built directly on an existing highway is Bitcoin’s secret weapon. It uses clever off-chain payment channels and smart contracts to enable near-instant and incredibly cheap transactions, while maintaining Bitcoin’s core principles of decentralization and security.

Why is this a big deal?

Imagine buying coffee using Bitcoin. Transaction fees can easily exceed the cost of the drink itself. This is not an exaggeration. This is the reality of Bitcoin’s current limitations. The Lightning Network eliminates this. We say that micropayments, transactions measured in satoshis (1 BTC = 100 million satoshis), have become not only possible but practical.

It’s not just about convenience. This leverages Bitcoin’s full potential. consider:

• Global micropayments: make cross-border money transfers as seamless as text messaging. Lightning Network makes this a reality.

• Decentralized apps (dApps) on steroids: Lightning’s speed and low fees create fertile ground for the next generation of dApps that go far beyond the limitations of current blockchains.

• The death of payment gateways: Peer-to-peer payments that bypass centralized intermediaries empower individuals and businesses.

Numbers don’t lie

Bitcoin’s main blockchain processes approximately 7 transactions per second. Visa processes thousands of transactions. Lightning Network? With 48,620 active payment channels (based on 1ML data), the theoretical throughput amounts to 24.31 million transactions per second. And that number can increase as more nodes and channels join the network.

Source: https://glossary.blockstream.com/lightning-network/

Note: LN TPS (500 TPS x 85,000 channels) in graphics uses outdated channel data (currently: 48,620).

This isn’t just theoretical. The average Bitcoin transaction fee is approximately $1. During peak season it goes up to $125! With Lightning, a $100 transaction can cost less than 1 cent.

Beyond Speed ​​and Cost: The P2P Revolution

The Lightning Network isn’t just faster transactions. This is the cornerstone of a truly decentralized peer-to-peer economy. This is the infrastructure for a world where individuals and businesses transact directly, cutting out middlemen and fostering a more equitable and efficient financial system. Additionally, transactions on the Lightning Network are not recorded directly on the blockchain, thereby enhancing user privacy. This applies to networks such as Nervos CKB’s fiber network, which plans to implement point-in-time locking contracts (PTLCs) based on hash time locking contracts (HTLCs) to further enhance privacy by using a different secret value at each hop in the payment path. Made even better through innovation.

The Way Forward: Stablecoins and Mass Adoption

Although impressive, the full potential of the Lightning Network is still untapped. Integrating stablecoins, which are cryptocurrencies pegged to stable assets such as the U.S. dollar, is critical to mass adoption. This will ease Bitcoin’s price volatility, making the Lightning Network much more attractive to consumers and businesses. Initiatives such as Lightning Labs’ work on LND support for the Taproot asset-backed stablecoin and Nervos CKB’s Fiber Network native support for custom assets, including stablecoins like Stable++, are paving the way for this integration and the Lightning Network. You will utilize your full potential.

Lightning network channel count and capacity

Source: https://mempool.space/graphs/lightning/capacity#all

verdict?

Lightning Network is not just a technology upgrade. It is a paradigm shift. This is the catalyst for Bitcoin’s evolution from a volatile store of value to a ubiquitous, everyday payment system. Challenges remain, but the potential is undeniable. This isn’t just about the future of Bitcoin. It’s about the future of finance itself. Buckle up. The ride will be much faster.

For more information about CKB and fiber optic networks, please visit the links below:

https://www.ckbtextile.net

https://twitter.com/CKBEcoFund