All you need to know about Bitcoin Lightning Network

cnbctv18.com:

One of the biggest problems with the Bitcoin blockchain is its painfully slow processing speed of 5 transactions per second (TPS). To fix this, developers have conceptualised the Lightning Network, a layer-2 solution that can be built atop the Bitcoin blockchain (layer-1). This layer is composed of multiple payment channels established between other parties and Bitcoin users.The Lightning Network enhances the efficiency of layer-1 blockchain by using off-chain transaction processing.

Think of it as lanes branching off the express highway. If the highway is clogged, traffic can be diverted to these lanes and kept in motion, thus resulting in de-cluttering. Similarly, the Lightning Network moves much of the load away from the main blockchain and processes it on layer-2.Transactions handled on layer-2 get vetted and confirmed much faster than those managed on layer-1.

They also significantly reduce the transaction cost. Thus, the Lightning Network is a layer-2 solution designed to boost speed and diminish cost.Why is the Lightning Network required?The Bitcoin blockchain uses a proof-of-work (PoW) consensus mechanism, which means that validators on the network must dedicate immense computing power towards transaction processing. Nodes handle complex mathematical computations to decrypt data and scrutinise it, thereby consuming surreal amounts of power.