How Lightning Network Works

by | Nov 25, 2021 | Resources | 0 comments

We perfectly understand that Bitcoin is a decentralized peer-to-peer payment platform. They are decentralized since it isn’t run by a company like Visa and it doesn’t have a leader. Bitcoin is wholly run by its users on a network of thousands of computers called nodes. Everyone wants to know how lightning network works.

Moreover the Nodes contain a full record of every Bitcoin transaction that has ever been made. Thereby this record is called a blockchain. Also more than half of all the nodes require agreeing that each new transaction is valid before it could be added to the blockchain. It is called consensus. Most of them are interested to run their own exchange platform with the help of Cryptocurrency Exchange Script or by quality BitcoinExchange Script.

It is illustrated that one block of new transactions takes around ten minutes to be wholly processed and actively added to the blockchain. In addition the nodes that do most of the work of processing transactions which are naturally called miners and they’re primarily paid fees for the work they do. This actually means that sending Bitcoin is not only slow, it could also be expensive. Many people are interested to run their own exchange platform with the assistance of Cryptocurrency Exchange Script or by perfect Bitcoin Exchange Script.

More importantly Bitcoin can process about 3-7 transactions per second (Tx/s). Thereby comparing that with two of Bitcoin’s real-world competitors, PayPal could process 150 Tx/s and Visa processes around 2000 Tx/s but can also go as high as 56,000 when it’s highly busy. In cases when Bitcoin is busy, the users have to wait for 6 days towards transactions to be processed.

The transaction fees also tend to go up during busy periods, so thereby the users have to pay more for less.You can experience the scalability problem Bitcoin and many other cryptocurrencies are struggling with.

There is one remedy called the Lightning network which is trying to solve the scalability problem by immensely adding an extra layer to the Bitcoin network. The Lightning Network permits users to set up their payment channels. This primarily means that thousands of small and medium-sized transactions could take place away from the main blockchain.

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