What is the Bitcoin Lightnig network and why does it exist?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

By now, you’ve heard many times over that Bitcoin, the original blockchain, struggles with various problems, such as low transaction volumes, expensive transactions, and a tremendous negative impact on the environment.

And that’s why the Lightning Network was invented. It is a separate fast lane, trying to make Bitcoin more usable. If you think about it, it makes sense: Why invent all these hundreds of other blockchains when you can just fix Bitcoin’s problems?

So, let’s take a quick look at how it works. The lightning network essentially keeps transactions off the main record of the Bitcoin blockchain, and hence it doesn’t need to process them.

Say you are at a birthday party and someone bought a gift. They are collecting money from everyone. In the traditional Bitcoin world, everyone would have to leave, go to the bank, and send the person the money. They can then confirm the money has arrived and a few days later, you could finally gift the present.

In the Lightning network world, you would simply give them cash at the party, maybe even exchange something for smaller bills with another person. In the end, only the person who bought the gift would have to go to the bank.

And this is taking off by storm. Thanks to Jack Dorsey’s Cash App alone, there are already 80m people on the Lightnig network. Definitely one to keep an eye on.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.