What is the Lightning Network?

• The Lightning Network is a decentralized system for instant, high-volume micropayments that prevents users from delegating custody of funds to trusted third parties.
• It is a layer-2 protocol on top of the Bitcoin base layer (layer 1), the actual blockchain, which uses Bitcoin’s high protection standards to secure it.
• Bitcoin transactions are usually slow and require one hour to finalize and this makes them inefficient for small payments such as buying coffee or train tickets.

How Does the Lightning Network Work?

The Lightning Network is designed to enable fast, cheap and secure payments without having to wait for block confirmation times. This is achieved by setting up payment channels between two parties on top of the base layer (Bitcoin blockchain). These payment channels rely on multi-party smart contracts and allow users to quickly send and receive payments with virtually no or minimal fees while achieving a throughput (message delivery rate) of approximately 1 million transactions per second (TPS).

Advantages of Using The Lightning Network

Using the Lightning Network offers several advantages over using traditional payment methods:
• Instant Payments – Payments are instant and do not require expensive block confirmations.
• Low Fees – Transactions cost significantly less than those on the base layer (Bitcoin blockchain).
• High Throughput – The network can process up to 1 million transactions per second.

How To Set Up And Use The Lighting Network

To use the Lighting Network, users must first set up a wallet and fund it with Bitcoin. After setting up their wallet, they can create payment channels in order to start transacting.


The Lightning Network offers an efficient way for users to send payments quickly with low fees and high throughput capacity. By setting up their own wallet, creating channels and funding it with Bitcoin they can start using it right away.

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