The Bitcoin Lightning Network
On its most basic level, the lightning network is a method for Bitcoin users to exchange currency value off the Bitcoin blockchain.
This is accomplished using a few complex algorithms that interact with Bitcoin’s base script (or layer), and it allows for, that’s right, lightning-quick payments at a fraction of the transaction fees.
The lightning network is a second layer technology applied to bitcoin that uses micropayment channels to scale its blockchain’s capability to conduct transactions more efficiently. Transactions conducted on lightning networks are faster, less costly, and more readily confirmed than those conducted directly on the bitcoin blockchain (i.e., on-chain).
While previous micropayment solutions involve holding funds with trusted custodians, the Lightning Network achieves instant micropayments via smart contracts. Through a network of multisignature transactions, any participant on the Lightning Network is able to pay anyone else within the graph of participants.
“Lightning is like a bar tab for the world”
How The Bitcoin Lightning Network is Already Changing Lives | Jack Mallers
There is a conceptual division between Bitcoin the asset ( the hard money fixed-supply commodity-like asset) and Bitcoin the network.
“Lightning Network” refers to a specific design for a payment channel network. In other words, this second layer monetary network ( The Lightning Network ), allows Bitcoin to do things like; carry payment standards, receiving standards, clearing cash finality, and physical bear instrument clearance.
It is used as an infrastructure piece similar to the Visa monetary network or the PayPal monetary work, but instead, it uses Bitcoin’s distributed monetary network under the hood and does everything cheaper, better, faster.
