Bitcoin gave birth to the decentralization era, but it needed some improvement. This desire to improve gave birth to the bitcoin lightning network. The Bitcoin Lightning Network helps in many ways to care for the shortfalls in the bitcoin network. Through this article, we are going to explain what this amazing bitcoin lightning network technology is and how it helps to scale up the bitcoin protocol.
What Is Bitcoin Lightning Network?
The Bitcoin Lightning Network can be put in simple terms as a decentralized payment network that allows users to carry out transactions without having to record them directly on the blockchain. Meaning it gives an off-chain solution to the scalability problems of the bitcoin network.
It is separate from the Bitcoin network and has its own nodes and software that communicate with the main bitcoin blockchain through mini-ledgers that are called channels. Its transactions are instant, the fees charged by the network are very low and are in units of satoshis and also, the minimum transaction amount is very low.
How Bitcoin Lightning Network Scales Blockchain
There are two main areas in which the Bitcoin lightning network scales the Bitcoin blockchain. They are as follows:
- Micro Payments: Unlike the Bitcoin network which has a minimum transfer amount, the Lightning Network allows users to push the limits of transactions to the smallest unit currently available which is one Satoshi or put 0.00000001 BTC.
- Privacy: In this area, Bitcoin Lightning Network offer users a high level of confidentiality. Those transacting do not need to make their channels known to the broader network. Thoughothers may be able to look at the blockchain and see that a transaction opened a channel, they won’t be able to tell what’s going on inside it. Moreover, If the users choose to make their channel private, only they will know what transactions are taking place.
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What Is a Bitcoin Lightning Wallet?
This is what a user needs in order to participate in the Bitcoin lightning network and have access to a lightning node that can access both the Bitcoin blockchain as well as the lightning network. There are a number of services that give you access to an existing lightning node via a mobile app, desktop application, or website.
These services are called Bitcoin Lightning wallets. Depending on the type of wallet, it can either be a custodial or non-custodial wallet. With custodial wallets, your funds are in the custody of the company that is the operator of the wallet.
How To Set Up a Bitcoin Lightning Wallet
Setting up your non-custodial bitcoin lightning wallet is easy. First, download any of the above-mentioned lightning wallets and install them on your device, then create an account. Next, you need to generate a bitcoin lightning invoice that you will give to the other party in order to get paid.
The invoice will look something like this;
Apart from just using a lightning wallet to send the smallest amount of Bitcoin to others, you can also earn with it using the Illusive Moose platform. Feel free to head to the platform to scheme through it for now. Our next article will focus on explaining what Illusive Moose is and how you can earn with it using the bitcoin lightning network. Stay tuned.