Blockchain often faced criticism for not improving its per-second transaction speed. The scalability was often restricted and that had a direct impact on the speed of transactions. However, with the introduction of the new protocol, Lightning Network, experts believe that the block industry has finally solved the puzzle. The Bitcoin blockchain experienced several technical limitations in the past, but not anymore.
Bitcoin’s distributing nature limited the number of transactions in the network. On one hand, Visa delivered almost thousands of transactions every second. On the other hand, Bitcoin could only complete ten transactions per second. After the launch of Lightning Network, Bitcoin’s block confirmation time reduced significantly. For example, previously, it took nearly ten minutes for the confirmation of a bitcoin transaction. Moreover, the transaction fees also added to the overall cost of the investor. But, thanks to Lightning Network, Bitcoin can now enable thousands and millions of transactions every second.
Lightning Network works on a safer transaction technology than before. It uses payment channels to facilitate the transactions. Both parties create digital signatures to confirm the transaction, and at least one party will commit funds into the ledger entry. Both parties will have a private key. The payment will go through only if both the keys sign.
One advantage of this technology is that Bitcoin users can now invest in better schemes depending on the market condition. All they need to do is check the price of subsequent crypto coins before investing. Using crypto trading tools help millions to trade safely and successfully. You can go through the Bitcoin Compass Review before using one of these trading tools.
Lighting Network goes beyond payment channels to create a bigger network that uses smart contracts enabling decentralized capacities to reduce counterparty risks. So, you don’t need to trust other investors as your intermediaries. Smart contracts and multi-signature facility will determine if the other investors are truly trustworthy or not. Lightning Network uses cryptography to make sure that your funds will reach the intermediaries automatically. If there is a mismatch in the signature, the money will get refunded to your wallet within a few working days.
The introduction of Lightning Network makes nodes analogous to all the Bitcoin miners. These nodes work in tandem along with the servers responsible for processing the transactions on a single network. Another similarity is that they don’t have control over funds they usually move. So, the nodes cannot tweak the payment system ever. For example, if B cannot steal A’s money because he only receives an incoming payment if he previously sent any outgoing payment to A.
Another benefit of lightning payment is it remains unaffected if the other party goes offline during the transaction. Lightning Network has an in-built smart contract mechanism so that users can unilaterally call off the channel if the time of transaction expires. So, if you are making a payment and B goes offline, you will get your money back if B doesn’t come online within the specified time.