Bitcoins Lightning Network: A Beginners Guide
Whenever a transaction occurs on the blockchain a gas fee is charged to verify the transaction which goes to the miners. This makes adding data to the blockchain very expensive at scale. If millions of people started transacting small amounts it would cause long queues and incredibly high fees.
This can be easily solved with centralized systems similar to the one we currently have, but that would defeat the purpose of blockchain itself. Transactions could be censored, and privacy would be nonexistent.
To tackle this enters lightening network. A layered system similar to the internet built on top of the bitcoin protocol. It enables near-instant payments between users. Instead of transacting directly on bitcoin blockchain we send and receive money on a layer above it the lightning network channel that has bitcoin protocol as its source of truth. Its trustless and doesn't have any centralized database. It provides the ability to exit and return to bitcoin layer at any time.
Lightning network consists of many two party channels. This enables users to transact on the channel any number of times with no fees.
