The scalability argument has been relevant in the Bitcoin community ever since the network gained popularity. A potential solution to this problem was the introduction of the Lightning Network.
The Lightning Network is a solution built on top of the Bitcoin blockchain that allows for instant, high-volume micropayments. Even as the transaction speed for Bitcoin sits at an average of 7 transactions per second, the Lightning Network scales the potential of the blockchain to transact in milliseconds to seconds.
The solution allows for users to open a payment channel between the sender and the receiver, which can then conduct an unlimited number of transactions. Upon the channel being closed, all the transactions are broadcast to the blockchain. It utilizes smart contracts to conduct transactions at “million to billions of transactions per second”.
A post on Reddit showed how efficient the Lightning Network is when implemented on the blockchain. User Legitinternetguy said:
“So far I’ve made 42 transactions on Lightning Network, and it has cost me 600 sat (channel open) and about 120 sat in routing fees. total of 720 sat, or 4.9 cents. Virtually no other alt-coin can compete with these costs.”
This was accompanied with an image of the aforementioned transactions, providing an opportunity for Bitcoin to become the peer-to-peer cash system that it aimed to be in the beginning.
The technology also allows for cross-chain atomic swaps to occur off-chain. This can be achieved using heterogeneous consensus rules. These may result in the creation of true decentralized exchanges without 3rd party custodians as they exist today.
Redditors rejoiced at the potential cost-savings of the network, with user Hanspanzer saying:
“5 cents for 42 tx is negligible as well and bitcoins network is by far the biggest and proven to be robust.”
Comparing it to Nano, user Legitinternetguy said:
“Not while keeping same level of decentralization. Also Nano cant scale to Lightning level, LN could theoretically handle around 3.5 million transactions per second today.”
User Hanspanzer praised the Lightning Network, saying:
“the fees that gonna be saved will stack to an enormous amount. this is wealth creation in action.”
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