What is Lightning Network?

What is Lightning Network?

The Lightning Network is the second layer of Bitcoin intended for fast transactions. You are spending Bitcoin that has been locked away in channels, to provide near instant transactions. Normally Bitcoin transactions need to be verified by miners. Lightning channels are already on the blockchain once they’re open so there is no need for verification from miners.

What's wrong with Venmo or Zelle?

Payment apps are generally OK if you are sending money to someone you know and both use the same currency. However, payment apps require a third party to process your transactions and offer very little privacy. Lightning Network allows you to spend Bitcoin nearly instantly and with a greater privacy.

What is a Lightning Node?

A lightning node is a device that allows you access to the Lightning Network. A Lightning Node runs software that enables you to open channels with other nodes and ultimately send and receive payments on the Lightning Network. You can run your own lightning node at home from a Raspberry Pi.

Raspberry pi - A very inexpensive single board computer.

This is a Bitcoin Lightning node running on a Raspberry Pi. It is pretty easy to set up with all the online instruction that exists today.

What are Lightning channels?

Lightning channels are like escrow funds established on the Bitcoin blockchain. Contributing funds to a channel open allows you to send that amount to the node on the other side of the channel. Lightning payments pass through your node on their way to the destination node, paying you a small fee for using your liquidity.