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How Is Lightning Network Making Bitcoin a Viable Medium of Exchange

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VOC, Voice of Crypto, Bitcoin

Lightning Network is the newest addition to Bitcoin’s pathbreaking records in the world of crypto, which might be well on its way to becoming the smoothest peer-to-peer payment system. The scalability of Bitcoin has been under some extreme attention lately, and Lightning Network is an effective way to fix the issue and ensure smooth transactions between two or more participating nodes.

What Is Lightning Network

Lightning Network is a “ Layer-2” payment protocol that sits atop Bitcoin technology and stabilizes it. Running on the Bitcoin Blockchain, Lightning Network is intended to improve everything that Bitcoin originally intended to do, like resisting censorship, decentralization, and quicker exchanges or payments.

Lightning runs on the basic principle of opening a payment channel and settling the payments by closing the channel. The technological nitty gritty that falls between these two phenomena involves Lightning Network transactions and related interactions with the base blockchain.

Eliminate Censorship

Bitcoin is not the only cryptocurrency developing its  Layer 2 technology to stabilize its functionality. But as it stands right now, Bitcoin might be well on its way to creating the most efficient one because many other emerging second layers are compromising the operational independence of the cryptosystem.

As was initially intended for Bitcoin, the idea of resisting third-party meddling and censorship remains central to the way Lightning Network works. Users continue to run their nodes and take charge of their transactions without looking for trustworthy third-party merchants or go-betweens.

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Unlike many competitors like Ethereum, Lightning Network is precisely what it claims to be~ a network! Each user’s payment channel functions independently, so even if one user’s payment channel runs aground with censorship or exploitation crises, the rest of the network stays afloat. And the censored individuals can also just go ahead and make an alternative payment channel if the need arises. 

Lightning-fast Speed

If a payment or transaction is initiated on Lightning Network, it will hop through multiple payment channels before it makes it to where it is supposed to be, but all of this happens in a few seconds. In fact, if a hop does not need to translate between payment channels, the process becomes quicker and more accessible. This goes a long way in improving the processing time of the transaction, which can typically come down to under a second.

As for the fee, around 0.1% of the transaction amount can go into that, which still makes it a lightning-fast and convenient improvement to Bitcoin’s existing transactional system.

Make Bitcoin More Secure

The more you use crypto transactional systems like Bitcoin and Lightning Network, the more stable they will become. This is because routing fees incentivize the nodes that carry the transaction through Lightning Network, and there is a push to do better.

This competitive, usage-based incentive model ensures that Bitcoin becomes a more stable, secure, and reliable platform for transactions and payments. The routing nodes earn incentives based on the transactions they forward and the payments they facilitate.

Tipping the balance over to the side of chaos and mistranslation when it comes to failures in terms of liquidity, channel volume, et cetera, can lead to another bout of confusion and inefficiency. So, as per design, routing nodes try to send as many payments as possible. This not only improves the efficiency and speed of the transaction but also strengthens the blockchain. 

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Final Thoughts

The Layer-2 system makes excellent use of the underlying base blockchain, ensuring that the autonomy of the peer-to-peer payment system is maintained. Along with this, Lightning Network is also improving the scalability of Bitcoin while lending it more stability too.

Without actually going into the technicalities, layer 2 transactional system, in general, and Bitcoin’s Lightning Network, in particular, is about to steal the show!

 

A post-graduate is Sociology, Sreerupa's interest primarily lies in researching on the global market trends of production and consumption.

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