If you are a loyal follower of the happenings in the crypto space, you must have heard about the latest -in relation to Africa-.
If you haven’t, here’s the latest: People in Nigeria, Kenya and Ghana can now receive instant, low-cost remittances in local currency from the EU and the UK through Bitcoin’s Lightning.🇪🇺🇬🇧 -> 🇬🇭🇰🇪🇳🇬
This is made possible by the Bitcoin Lightning Network ⚡️
The Lightning Network is a technology that enables fast, cheap, and scalable payments on the Bitcoin network. It operates as a layer on top of the Bitcoin blockchain, allowing users to conduct transactions directly with each other without the need for intermediaries. This not only improves the speed and efficiency of transactions, but also reduces fees and enables the use of Bitcoin for small, everyday payments.
But how does the Lightning Network work? At its core, the Lightning Network is a network of payment channels between users. These channels allow users to make multiple transactions with each other without the need to broadcast each individual transaction to the blockchain. This off-chain processing significantly reduces the amount of data that needs to be processed and verified by the network, making transactions faster and cheaper.
To illustrate how the Lightning Network works, let’s consider a simple example. Suppose Sodiq and Dayo want to conduct multiple transactions with each other. They can open a payment channel by depositing some Bitcoin into a special address on the blockchain. This deposit is known as the “channel balance” and serves as the maximum amount that can be transferred between Sodiq and Dayo through the payment channel.
Once the payment channel is open, Sodiq and Dayo can conduct an unlimited number of transactions with each other without the need for further confirmation on the blockchain. These transactions are recorded on a shared, digital ledger that is only accessible to Sodiq and Dayo. When the payment channel is closed, either by Sodiq or Dayo, the final balance of the channel is broadcast to the Bitcoin blockchain and becomes part of the permanent, public ledger.
The Lightning Network not only allows for fast and cheap transactions between two users, but it also enables users to route payments through multiple channels to reach their destination. This allows for the creation of a network of payment channels, where users can make payments to each other indirectly through a series of intermediaries. This network of channels forms the Lightning Network, and it allows users to make transactions with anyone on the network, even if they don’t have a direct payment channel with each other.
In conclusion, the Lightning Network is a technology that enables fast, cheap, and scalable transactions on the Bitcoin network. By using payment channels and routing, the Lightning Network allows users to conduct transactions directly with each other without the need for intermediaries, improving the speed and efficiency of the Bitcoin network.