Bitcoin Lightning Network

Lightning Network is a protocol on top of the Bitcoin blockchain.
The Lightning Network may solve the Bitcoin scalability problem.

Bitcoin scalability is a contentious and important issue at the moment. The issue of scalability and increasing transaction fees came to a head recently with the Bitcoin Cash fork. Proponents of Bitcoin Cash (an altcoin) wanted larger blocks. When segwit2x failed they hard-forked off from Bitcoin to create Bitcoin Cash. The issue is increasing fees for space inside a Bitcoin block. At the time of writing it can cost as much as $5 to ensure space in the next Bitcoin block!

Since Bitcoin is increasing in usage and popularity and Bitcoin blocks can currently hold just one megabyte of transaction data the blocks are filling to capacity. While this is good since it means Bitcoin is growing it also means the Bitcoin bottleneck problem is real. Each Bitcoin transaction bids to get data inside a block through the transaction fee. If your fee is too low your transaction may not get into a block and ultimately may get orphaned (lost forever).

There are two potential solutions to this problem. The first is to increase the data each block can hold from one megabyte to a larger amount, this is the solution Bitcoin Cash and others such as Bitcoin XT have tried to implement. The second is to layer another protocol on top of the Bitcoin block chain and this is the approach of the Lightning Network.

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