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This article introduces Lightning Network and its working principle, the content is very detailed, interested friends can refer to, hope to be helpful to you.

When Bitcoin was first proposed by Satoshi Nakamoto in 2008, James A. Donald's first public comment on the system included the following: "I understand your proposal in a way that doesn't seem to be on the required scale." A decade later, scalability is still the biggest problem for Bitcoin and other sophisticated cryptocurrency systems.

What exactly does scalability mean? Well, throughout its existence, Bitcoin can only handle about seven transactions per second. Although this is enough in the first place, the system has been crowded for several years. Therefore, the transaction takes a long time to process, and the transaction cost is on the high side.

If Bitcoin is to be a complete alternative to existing payment systems forever, it clearly needs to be able to compete with them. So far, it is still a long way off. To understand the severity of the situation, you only need to compare the seven small transactions per second of bitcoin with the average 24000 transactions of Visa and the peak capacity of about 50000 transactions per second.

Over the years, the Bitcoin community has made various suggestions on how to improve the scalability of Bitcoin, but has not yet reached a clear overall consensus. That's why we currently have several Bitcoin-like networks branching out from the original network. However, a proposed solution that is currently being tested may work properly. It's called the lightning network.

What is Lightning Network?

At some point in history, sending telegrams was the fastest and most effective means of long-distance communication. To do this, you must go to the local post office, fill out the form and pay according to the letters contained in it. The message is then sent to the nearest Telegraph office for transmission to the remote end. The postman then sends the telegram to the destination.

Basically, there are a lot of people involved in sending a short text message, and you have to pay a lot of money. This is almost the current state of the Bitcoin network. In this analogy, the lightning network is basically like if there is a person you want to talk to on speed dial: just press "1" to make your friend's phone ring.

In short, the idea behind Bitcoin Lightning might sound like this: we really don't need to record every transaction on the blockchain.

Instead, Lightning Network adds another layer to Bitcoin's blockchain, allowing users to create a payment channel between any two parties on the outer layer of that amount. These channels can exist as needed, and because they are established between two people, the transaction is almost immediate and the cost will be very low or even non-existent.

How does it work?

Enter Danny and Jon. They may be working together, they may be relatives or a couple, and the point is that they need to remit money to each other frequently, quickly and at the lowest cost. So they set up a channel on the lightning network.

First, they need to create a multi-purpose wallet, which is a wallet that they can access with their respective private keys. Then they all deposit a certain amount of bitcoin (such as 3 bitcoins each) in the wallet.

Since then, they have been able to trade freely between the two. Basically, these transactions are a reallocation of funds stored in a shared wallet. For example, if Danny wants to send 1BTC to Jon, she will need to transfer ownership of that amount to him. The two of them then use their private keys to sign the updated balance sheet.

The actual allocation of funds occurs when the channel is closed. The algorithm uses a recently signed balance sheet to determine who gets what. If Danny and Jon decide to close the channel after a deal, Danny will get 2BTC and Jon will get 4BTC.

Only after the channel is closed will information about its initial and final balances be broadcast to the bitcoin blockchain. Therefore, Lightning Network works by allowing users to make a large number of transactions outside the main blockchain and then record them as individual transactions.

The most exciting thing is that once the technology is widely adopted, you don't even have to set up a special channel to send money to someone. Instead, you can use the channel of the person you are connected to to send a payment to someone. The system will automatically find the shortest path.

This is how Lightning Grid may eventually provide the answer to the never-ending debate about Bitcoin buying a cup of coffee. Judging from its appearance, doing so through the Lightning Channel Lightning Network may work because it is almost a purchase and does not incur any cost.

Is that safe? It is worth noting, however, that the concept of Lightning Network means that the system will work on top of the blockchain, but does not actually have its security. As a result, it is likely to be mainly used for small and micro transactions. Larger transfers that require decentralized security will most likely still be done at the original layer.

Finally, another interesting feature of Lightning Network currently being tested is the cross-chain atomic exchange, which is the transfer of tokens between different block chains. In short, it is a way to exchange any given cryptocurrency to another cryptocurrency without using cryptocurrency exchange.

Eventually, the technology could make insecure centralized cryptocurrency exchanges and transaction-related hassles obsolete. The first test of exchanging tokens between Bitcoin and Lettercoin test block chains has proved successful.

Who developed it?

Lightning Network was originally described by Joseph Poon and Thaddeus Dryja in the 2015 white paper-the current version of the white paper can be found here. There are currently three teams working together on most of the work on Lightning Network: Blockstream,Lightning Labs and ACINQ, as well as comments from other members of the Bitcoin community.

Each of the startups mentioned above is using their own implementation of the Lightning network protocol written in a different programming language.

The service provider product Blockstream is applicable to the C version of LN. Lightning Labs is developing a Lightning Network Daemon (lnd) written in Golang. ACINQ is responsible for Scala implementation.

In addition, other implementation options are currently under development. A complete list is available here. Finally, it is important to mention that recent tests have proved that the three major implementations are fully interoperable, which means they can work seamlessly with each other.

When, where and why do you use it?

The cryptocurrency community seems eagerly looking forward to the launch of Lightning Network. Initially, it was designed specifically for Bitcoin, but the technology is currently being developed for a range of other cryptocurrencies, such as Stellar,Litecoin,Zcash,Ether and Ripple.

The real Bitcoin has actually been sent and almost always received using Blockstream,Lightning Labs and ACINQ implementations, proving that all three implementations are interoperable. In addition, the specifications outlined in the first version of the Lightning Network rules have been published.

These specifications are a big step forward for the network because they can be used by application developers and Lightning Network can be implemented in other programming languages.

However, the network is still in its infancy. So far, there is no software that allows real temporary users of the network to trade. In addition, the current implementation is still very wrong. Lightning Network developers have urged users to use Bitcoin's test network to learn about the network, rather than sending any real money.

Developers also advise users to be patient because the network code is very complex and requires rigorous testing. In order to be fully adopted by the bitcoin community, Lightning Network needs to prove that it is secure and available. With this and many other factors in mind, experts predict that a fully functioning lightning network could take months to years.

As for the reasons for using the network, the answer is simple: scalability. If the network actually provides solutions to Bitcoin's main problems, it is likely to be adopted by other cryptocurrencies.

If this happens, cross-chain atomic exchange technology may be further developed, marking the first step in establishing a truly decentralized cryptocurrency exchange.

Advantages of Pros

As mentioned earlier, the Lightning Network is only the first step. It is still in the development stage, and it remains to be seen whether it will actually work as developers think. If so, here are some of the most important advantages of Lightning Network that you can benefit from:

Transaction speed. Once the network is online, you don't have to wait for multiple confirmations of every transaction you try. No matter how busy the network is, transactions are almost real-time. If that happens, the cryptocurrency market will take a huge step towards being able to compete with traditional payment systems such as Visa,MasterCard and PayPal.

Transaction costs. Since the transaction will actually take place within the lightning network channel and outside the blockchain, you will only have to pay the smallest fee, if any. This is one of the main advantages of Lightning Network, as it will completely make Bitcoin a payment method for stores, cafes, bars, etc.

Scalability. Flash Grid is said to be able to increase the number of transactions per second of Bitcoin and other cryptocurrencies to an all-time high of at least 1 million transactions per second.

* * cross-chain atomic exchange. * * the first test of cross-block chain trading worked, and it was all very exciting. As long as two blockchains share the same encrypted hash function (and most major regional chains share), users will be able to forward money from one chain to another without having to trust third-party intermediaries, such as exchanges. This technology has real revolutionary potential.

Security and anonymity. Most cryptocurrencies are not completely anonymous. Sending can still be tracked from one wallet to another. However, when it comes to lightning networks, most transactions take place outside the main blockchain, so almost all micropayments made through Lightning channels are untraceable.

Shortcomings of Cons

It's not fully operational. The main drawback of Lightning Network at the moment may be that it is not yet fully operational, so there is no way to fully assert how good it really is. In addition, the concept looks great on paper, but so far it's impossible to know whether it will look great after implementation.

The complexity of channels. Lightning network is conceptualized as a channel network, once established, it should theoretically allow seamless transactions. However, if the payment must take an overly complex route, it is impossible to determine what will happen. Of course, if your transaction needs to go through dozens of intermediate channels, the cost will increase.

Upper limit of channels. Another disadvantage of the network is that in its current version, the channel is restricted. In other words, the amount of bitcoin stored in the wallet of the two users when they set up the channel is the maximum amount of money in the channel. This setting creates a situation where some users may need to select liquidity in the lightning network channel and its external mobility in the main block chain. This is far from ideal, especially for those with limited resources.

The route is centralized. In addition, there has been concern about the formation of "hubs"-nodes with large amounts of money through which most transactions will pass. Many Bitcoin enthusiasts see this as a further centralization of the network. However, these centres are unlikely to receive any significant transaction costs.

Similarly, it is worth pointing out that the advantages and disadvantages of the lightning network listed above are very speculative.

Should I use the flash grid?

Well, in fact, if you're not a premium user, you can't use Lightning Network yet. So, the only thing you can do now is to wait and see if the lightning network can be achieved rather than hype, whether it really works and describes, and whether it is safe.

Remember, Lightning Network is not the only scaling proposal, and it is by no means the undisputed leader in the competition, with Bitcoin Cash (BCH) as its main competitor. The debate between BCH elders and lightning supporters is so heated that there is no end in sight. It may be one of the proposals at the forefront, they may co-exist, or there may be a completely different solution.

Lightning the power grid sounds exciting. If it does, consider what you actually use Bitcoin. If you use tokens as a long-term investment rather than anything else, you may not even need Lightning Network because it doesn't seem entirely safe to entrust it to handle large transfers at the moment.

But if you see Bitcoin as an alternative payment method, then lightning networks will be crucial to you if they live up to expectations. Real-time micropayments, increased anonymity and almost no cost-it seems to provide a real solution to most Bitcoin problems.

About Lightning Network and its working principle is shared here, I hope the above content can be of some help to you, can learn more knowledge. If you think the article is good, you can share it for more people to see.

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