What Is The Bitcoin Lightning Network?

What Is The Bitcoin Lightning Network?

If you are new to Bitcoin, welcome; we are glad to have you here! Welcome to the Bitcoin revolution! Today wanted to give a brief overview of the Bitcoin lightning network.

I'm sure some of you may be asking yourself what the hell is this new-fangled "lightning network" and why I should know about this. The lightning network is critical to the adoption of Bitcoin on a global scale.

Let's start with the basics. If you don't know, Bitcoin is a "blockchain" that allows users to send transactions to anyone worldwide without using a financial intermediary such as a bank or a digital transfer service provider such as Venmo or Cashapp.

Bitcoin allows the digital transfer of value from person to person, the same as cash. This is a true technological achievement that has gone relatively unnoticed right now, but it won't be this way forever.

I bet you didn't know that the Bitcoin network processed over $3 trillion worth of payments in 2021. The Bitcoin network also processed more transactions than "all credit card networks combined for the entire year," according to NYDIG global head of research Greg Cipolaro and research analyst Ethan Kochav.

Keep in mind that Bitcoin is only 14 years old. This is a mind-blowing statistic if you step back and think about it for a second.

The Bitcoin network is considered a "layer 1" blockchain, meaning it is the foundation that can be built upon.

Think of layer 1 Bitcoin as a concrete slab when building a home. When building a home, you want to have a solid foundation to build your new home. This is why a slab is poured because you know it is strong and won't change over time due to environmental changes.

Bitcoin is the same thing in the digital realm. A governmental entity can't control it. It is censorship resistant, meaning you can send it to anyone in the world regardless of how anyone feels about who you are transacting with. The 21 million issuance of Bitcoin is hardcoded into the code itself and will never be changed. These truths make a solid foundation for Bitcoin entrepreneurs to build on, and they have. This is where the lightning network comes in.

Lightning Network Has Faster Transactions Speeds

The lightning network is what is called a layer 2 protocol. It is built on top of layer 1 (Bitcoin). The purpose of the lightning network is to improve transaction speeds and to send micropayments that settle instantly for fractions of a penny.

Layer 1 Bitcoin can only process up to 7 transactions per second (TPS), whereas Visa can process up to 24,000 transactions per second. As you can see, layer 1 Bitcoin is limited in its transaction speed.

The lightning network can handle 1 million transactions per second! As you can see, this is an order of magnitude greater than lay 1 bitcoin and Visa and Mastercard.

The lightning network provides the speed and scalability that layer 1 Bitcoin can not offer and was not designed to do.

In addition to providing small and quick payments, you get the benefit of settling your transaction on the most secure blockchain on the planet.

The lightning network is ripe for adoption by small businesses. How would you like to experience instant payment settlement and eliminate credit card fees?

When customers pay on the lightning network, payment is settled in seconds, not in days or weeks like you have in the traditional payment world. There are no chargeback issues to deal with as well. This means more income predictability and better profit forecast for your business.

Another great benefit of the lightning network is the fee is much smaller than the 3 percent transaction fee card issuers charge you to process payments. The median fee for sending a lightning payment on the network is less than a penny right now!

Visa, Mastercard, and Discover can't compete against this. Simply switching to the lightning network puts 3 percent of your profits into your pocket to invest in your business or pass on the savings to your customers.

The lightning network is a monetary evolution built upon Bitcoin's financial revolution. If you have questions about Bitcoin or how to adopt it for your business or personal use, don't hesitate to reach out to me by email or social media. Always willing to help!

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