Published on May 13th, 2022
The electricity or hash power generating resources become more and more costly for the miners, and they do not mine the bitcoin trades with the small amounts.
So, the transaction cost is increasing by rising the number of bitcoin miners. So, bitcoin cash came into existence for easy and fast payment, but it cannot beat the original one, and people do not buy bitcoin cash because of loyalty toward the original bitcoin.
So to solve the problem, the bitcoin second layer, known as the lightning network, came into existence without replacing the original bitcoin crypto coin. If you need any financial advice then you can use online financial portals for more information you can see here.
What Is A Blockchain System, And How Does It Work?
Blockchain is the first system for handling or managing bitcoin transactions, and all the miners live virtually on this system through their nodes (miner’s computer).
When the bitcoin trade occurs, it is first revealed on the platform and goes through the mining process with different nodes and people who have skills and mining resources to validate the trade, called bitcoin miners.
It needs a lot of energy to validate bitcoins, up to one megabyte, around 1785 kilowatt. Hence, a single bitcoin transaction takes, on average, ten minutes to approve.
Thus mining is a very challenging part, and that is why the charges for transferring are high, the speed of moving is meagre, and sometimes it takes hours and days for transfer.
What Is The Bitcoin Lightning Network?
Since the blockchain system of bitcoin is working on the first layer, that is very challenging and complicated. Still, some developers have decided to make it easy (cheaper and faster) to improve the user experience.
But some bitcoin developers did not want to change the blockchain’s rules, so they decided to create a new layer known as the second layer without affecting or modifying the first layer of the blockchain, called the bitcoin lightning network.
So the bitcoin lightning network will create a direct relationship between the sender and receiver by adding payment channels that will help them make prompt payments at a cheaper cost.
So these channels are not intermediate institutes but wallets that may be centralized or decentralized with the feature of a lightning network.
Before using the bitcoin lightning network, always remember that you must have a lightning network wallet that will connect you through the payment channel.
For example, suppose you created a lightning network wallet, and a shopkeeper also made a wallet on this network. Now, when you send him payment via bitcoin, he will receive the bitcoin payment within seconds to his lightning wallet because no miners are mining the transactions.
But when you both want to close the payment system after a particular time, it will validate the bulk of bitcoin transactions you previously broadcasted on the first layer through the miners.
Why Does The Bitcoin Lightning Network Continue To Rise
There are the following reasons for growing the bitcoin lightning network’s popularity among the bitcoin users and bitcoin vendors who accept small bitcoin payments given below:-
- Cheap transactional charges:- Since you cannot use the first layer of blockchain or bitcoin for the minor transaction because it will cost you very high, the bitcoin lightning network will continue to rise for the lower transaction charges. Suppose if you want to buy a thing worth twenty dollars using bitcoin and pay five-dollar fees, then will you buy through bitcoin? You would like to pay via cash or a centralized digital payment method to avoid charges. The lightning network is doing, i.e., making the transactional fees nominal or meagre.
- Faster Payment: Since there is no involvement of the bitcoin miners and third parties until you close the deal (that may be for days or months), it makes the transactions fast through the payment channels. In simple words, miners will not mine the bitcoins until you close the deal with the vendor, and the payment channels will instantly send and receive payments via a lightning wallet, which makes it a good platform.
- Secure system:- It does not mean that it is a second layer, so it is not sure, but it works on intelligent contacts and is very secure for sending and receiving bitcoin payments.
- Easy setup:- There is no need to fulfil a lot of formalities like other centralized bitcoin wallets; instead, you can set up the lightning wallet in a few minutes and start sending and receiving payments.
- More adoption:- Since the bulk feature, many vendors who accept the small bitcoin payments are adopting this second layer of blockchain, and it is continuing to rise.