Is it possible to pay for a coffee with Bitcoins? Before the birth of the Bitcoin Lightning Network the answer was definitely no. Now no longer.
The ever-increasing value of BTCs makes it difficult to be able to use this cryptocurrency for small daily payments, but if Bitcoin wants to become the most popular peer-to-peer payment system in the world, it needs to scale down and streamline its procedures.
Very high taxation, overloaded network, very long transaction confirmation times have forced the Bitcoin community to seek new solutions. The Lightning Network is one of them.
What is the Bitcoin Lightning Network?
Bitcoin Lightning Network is a parallel alternative to the original network that uses payment channels in order to process transactions quickly without waiting for the block to load. The initial idea came from Joseph Poon and Thaddeus Dryje in 2015, and is currently being developed in the offices of Blockstream, Lightning Labs, ACINQ, and others in the Bitcoin community itself. It’s no secret that Bitcoin has a low median processing rate of seven transactions per second (TPS). This value is definitely far from that of the most used payment processors worldwide such as VISA (24,000 TPS), PayPal (193 TPS), other cryptocurrencies such as XRP (1500 TPS) or Ethereum (ETH) (20 TPS).
The Bitcoin Lightning Network has no upper limitation regarding TPS, on a single channel in the network it can process more than 250 TPS and can act on an unlimited number of channels simultaneously.
How does the Bitcoin Lightning Network work?
Basically, the Lightning Network allows users to make multiple off-chain transactions using only the starting and ending balance of the wallet, written in the Bitcoin blockchain. This approach significantly increases the reach of the network and reduces transaction fees. However, the Lightning Network is not a panacea, and critics point out its shortcomings, which include a potential centralization of the system and a decrease in overall security.
How to use the Bitcoin Lightning Network?
The following is a list of Bitcoin Wallets that support the Bitcoin Lightning Network:
- Lightning Peach (Android, iOS, Windows, Mac, Linux)
- Spark (Android, Windows, Mac, Linux)
- me (web)
- Bluewallet (Android, iOS)
- Wallet of Satoshi (Android, iOS)
- Zap (iOS, Windows, Mac, Linux)
- Bitcoin Lightning Network (Android)
- Éclair (Android)
- Shango (Android, iOS)
- House Node (Hardware)
- Joule (Browsers connected to Chrome (incl. Brave), Firefox, Opera)
In order to make payments through one of these wallets, you must initially top it up with a simple BTC transaction to the address of the new Lightning Wallet. Next, you will have to open a Lightning channel. Each portfolio works differently from the others, so you need to follow its guidelines or tutorials.
To conclude, keep in mind that for most of the digital wallets mentioned it is possible to receive Lightning payments only after having recharged it, opened a channel and made a first transaction. In addition, you may need to have a minimum balance to accept payments of large amounts.