What is Lightning Network?
Lightning Network is a decentralized Blockchain using smart contracts functionality to enable instant payments across a network of participants. It allows bitcoin transactions to occur instantly without any delay in block confirmation times (verification process for peer-to-peer payments). It will allow millions of transactions to occur within a few seconds, at low costs, even between different Blockchains, as long as both chains use the same cryptographic hash function.
The Lightning Network will allow two participants on the network to create a ledger entry and conduct a number of transactions. Upon completion of the transactions, the Blockchain will record the state of the transactions. The current state of the bitcoin network is capable of processing up to 7 transactions per second. The Lightning Network protocol was developed to solve the current block size issues of Bitcoin network, possibly increasing the transaction number
Currently, the transaction fees of Bitcoin for micro-payments are high and the transactions are counterproductive. The Lightning Network will allow for a minimum of 1 Satoshi ($0.00002 CAD) for a transaction, which is a small fee. Increasing the liquidity of Bitcoin will change the way we think about Fiat currencies and has the potential to eliminate intermediaries that presently assist consumers and businesses with day-to-day transactions.
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