What is Lightning Network? | Blockchain Intro

lightening network

The sending of the cryptographic currency can take hours and their transaction costs, although now they have decreased, can cost more than the simple payment we need to make.

If we take into account that Bitcoin seeks to replace and take the place of money completely, this is not the best way to get there. To improve there are many cryptocurrencies that seek to occupy that place and also try to find a solution. It seems that Bitcoin has already found it: Lightning Network.

Deepening the problem

Scalability is the biggest challenge facing many of the cryptocurrencies. Bitcoin manages to make up to 10 transactions per second. To overcome the big ones you still have to work hard. PayPal and Visa can make 193 and 1,667 transactions per second respectively.

In its appearance, it was already known that the blockchain would not scale correctly. Yes, small solutions have been implemented but none with great results. In addition, this is looking for the Bitcoin upgrade, last year, created a disagreement between the Bitcoin team that caused it to split. Giving rise to two blockchain and two cryptocurrencies where there had always been one. One more hard fork of the crypto. This is how Bitcoin Cash came about. As soon as some sought to implement Segwit, the others preferred larger blocks.

Now Lightning Network comes as a great solution. With fast transactions and low costs, maintaining anonymity and with the possibility of making payments through the different blockchain

Lightning Network

It is difficult for blockchain technology to scale without affecting decentralization.  Both the large blocks and Segwit ensure that a substantial part of Bitcoin reaches a smaller group of users. With Lightning Network they intend to offer a solution outside the Bitcoin blockchain. That is, it will not be necessary to carry out all the transactions in the blockchain. So the main chain can be dedicated to the larger transactions while the remaining transactions are processed in the second.

Example 1

Imagine a situation in which you split an account with a friend. You could keep track of transactions without having to access the blockchain. With Lightning Network, you can open a channel with a friend, in which you can make transactions as often and for as long as you want. The blockchain you will hardly have to use it when closing the channel in which the final state of the “account” that you had will appear. With this, it is possible to reduce the use of the blockchain.

Payment channels

It is simply an account that you open together where you deposit the same amount of money. In order to issue the money from the account the approval of the participants is needed. Imagine that Maria and Carlos create a payment channel and each one enters 1 bitcoin into it. The opening of this account and the payment of both people is recorded in the blockchain. Once this has been done, the channel is already open. The totality of the 2 bitcoins now belongs equally to both. Any of the 2 can close the channel without the need for the other member’s consent.

If Carlos sends 0.5 bitcoin to María, this shipment is simply a promise that will be fulfilled when closing the channel. If they decide to close in channel Maria will get 1.5 while Carlos gets 0.5. Which would not be normal because  Lightning Network is designed for people who make many movements among themselves.

The Lightning network

With this, you can easily see the difference between a payment in the different chain of blocks. In one move “promises” while in the other what moves is “real money”. And these promises can change owner incredibly fast through Lightning Network.

Example 2

But it does not stay there. Let’s go back to the previous example and see what else it allows us to do:

Suppose now that Carlos, in addition to having the channel with María, has another with Inés, and that Inés needs to send a quantity to María. For this, you do not need to create a new channel. Since Carlos is in 2 channels, it can be said that these are connected and Ines will be able to send María’s “promise” through Carlos.

If the payment channels become common among the society, the use of blockchain will not need to be used so much. Which is the idea that Lightning Network has developed for.


Another important aspect offered by Bitcoin among other cryptocurrencies is anonymity. So the only thing the world can know is that you have opened a payment channel, but not with who or what happens in it. To maintain better anonymity it would be advisable to have several payment channels open. It would make it more difficult for someone to track where the transactions went.

Negative aspects

There are several disadvantages in Lightning Network. Having to deposit money in the channel before you even can use it could be one, as well as preventing you from being able to use that money while you are there. In addition, opening and closing the channel continues to be costly transactions in the blockchain. Which, perhaps, makes it difficult for large investors to configure a substantial network of payment channels. Most of the payments will go through these centres and this can guarantee that there are still parties that can exercise a large amount of power and, therefore, guaranteeing centralization. With this Bitcoin could be more sensitive to external attacks.

Another point against would be the fact that you have to be online to receive a payment in  Lightning Network since it has to be approved by both parties.

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